MCI, the US telecommunications group, yesterday boosted the shake-up in the fast-growing US Internet transmission business by selling its Internet backbone operations to Cable and Wireless (C&W), the UK's second largest telecommunications group.
The deal, valued at $625 million, (£443 million) strengthens C&W's US operations and virtually guarantees that the planned $37 billion merger between WorldCom and MCI will go ahead.
Regulators in the US and Europe had warned they might veto the merger, the largest in telecoms history, because the strength of both companies in Internet transmission would result in dominance and damage competition in the fast growing Internet market.
Some estimates suggested the two companies combined would control more than 50 per cent of the networks over which internet traffic travels.
Yesterday both WorldCom/ MCI and C&W were confident the sale of MCI's Internet business would be enough to ensure regulatory approval for the merger.
A spokesman for the European Commission said: "If MCI were to sell their internet assets to Cable and Wireless, then this might help their case." The deadline for its decision is July 15.
The US long-distance operators AT&T and Sprint, and the local telephone company GTE, were barred from the bidding because of their existing strengths in the internet business.
C&W, a global operator, much of whose profitability is derived from its ownership of Hongkong Telecom, is comparatively unknown in the US. The price paid is reckoned to be good value for C&W by industry standards.
