The MCI Takeover Battle
“The MCI Takeover Battle: Verizon versus Qwest”
I. STRATEGIC PROFILE
This case profiles MCI’s merger debate between Verizon and Qwest in 2005. At this time, many other companies are merging due to the industry consolidation, therefore forcing MCI to keep up with its competition. MCI was acquired after a bidding war between WorldCom, British Telecom and GTE, with the winning bid being a $37 billion offer from WorldCom. MCI-WorldCom then acquired many other communication companies excluding Sprint due to a U.S. Justice Department ruling. WorldCom operated throughout its filing of bankruptcy, resulting with MCI being not only the surviving company, but one of the most extensive networks in the world. After posting losses in 2004, MCI must undergo a strategic process in which to choose the better bid, Verizon or Qwest, in order to stay on top of the industry.
II. SITUATION ANALYSIS
Many general environmental trends are effecting Verizon, Qwest, and the communications industry as a whole. The always changing technological needs are shifting from landlines to wireless, where Verizon has seen about one in five people using their wireless phones as their primary forms of communication. However, Qwest is still generating a strong majority of its revenue from their wireline segment, and will therefore have to eventually undergo the process of shifting to wireless. Demographics also play a large role in the success of a company. While Verizon has acquired most of its customers in the densely populated northeast region, Qwest covers the West and Northwest. This western population is less dense and uses landlines more frequently than wireless. Economically, communications have undergone an industry wide decline. After the terrorist attacks on September 11, 2001, the demand for high-tech products has declined, forcing companies to respond to this change. Another environmental effect is the sociocultural shift to simplicity and ease. Rather than having multiple servers, it
I. STRATEGIC PROFILE
This case profiles MCI’s merger debate between Verizon and Qwest in 2005. At this time, many other companies are merging due to the industry consolidation, therefore forcing MCI to keep up with its competition. MCI was acquired after a bidding war between WorldCom, British Telecom and GTE, with the winning bid being a $37 billion offer from WorldCom. MCI-WorldCom then acquired many other communication companies excluding Sprint due to a U.S. Justice Department ruling. WorldCom operated throughout its filing of bankruptcy, resulting with MCI being not only the surviving company, but one of the most extensive networks in the world. After posting losses in 2004, MCI must undergo a strategic process in which to choose the better bid, Verizon or Qwest, in order to stay on top of the industry.
II. SITUATION ANALYSIS
Many general environmental trends are effecting Verizon, Qwest, and the communications industry as a whole. The always changing technological needs are shifting from landlines to wireless, where Verizon has seen about one in five people using their wireless phones as their primary forms of communication. However, Qwest is still generating a strong majority of its revenue from their wireline segment, and will therefore have to eventually undergo the process of shifting to wireless. Demographics also play a large role in the success of a company. While Verizon has acquired most of its customers in the densely populated northeast region, Qwest covers the West and Northwest. This western population is less dense and uses landlines more frequently than wireless. Economically, communications have undergone an industry wide decline. After the terrorist attacks on September 11, 2001, the demand for high-tech products has declined, forcing companies to respond to this change. Another environmental effect is the sociocultural shift to simplicity and ease. Rather than having multiple servers, it