MCI, the country's second-largest long-distance telephone carrier, is ready for new challenges. In September 1998, MCI finalized a $37 billion buyout by WorldCom, the country's fourth-largest long distance carrier. The combined company, like its telecom-giant competitors, is looking to conquer not only long-distance, but also local services and Internet and cable services. The combined company, known as MCI-Worldcom after the merger, is now called Worldcom.

"Dot-com" growth with blue-chip security

Now that WorldCom's CEO Bernard Ebbers runs both WorldCom and MCI, he has in fact turned his company's energies towards the high-profit businesses of data transmission and international service. The company is counting on international deregulation and its fiber optic network (the world's largest end-to-end fiber optic network) to turn this telecom giant into a company with "dot-com" growth. With its long-distance unit bringing in the bacon, Worldcom can explore these new areas without the risk of over-inflated stock prices and other such problems that plague many high tech startups.

Go wireless

WorldCom is also looking to expand into the digital wireless market, which No. 1 AT&T and No. 3 Sprint Corp. have both entered. In 1999 Worldcom bought SkyTel, the wireless messaging firm, for $1.8 billion. The merger with Sprint, which is bringing along its all digital, nationwide, PCS network will give Worldcom a major place in the digital communications industry.

Wireless internet too?

The company, under the direction of Ebbers' notoriously tight-fisted ways, has also begun looking for cheaper ways to deliver its internet services. In late March 1999, WorldCom invested about $200 million in four companies that will let WorldCom offer internet service without having to lease telephone lines owned by regional Bell telephone companies. All four companies transmit their signals using direct-broadcast satellite signals. MCI's web hosting business -- under the name UUNet -- is booming.

Anything for a buck

After taking over, Ebbers cut about 2,000 employees (about 2.7 percent of its 75,000 workforce) and began a series of corporate cost-cutting measures. All but two executives (Ebbers and the company's chairmain)lost their cars and drivers, had to stay in budget hotels when traveling, and even lost their water coolers. Ebbers also removed them from the company's Washington, D.C. headquarters to save money.

A possible merger...

In October 1999 WorldCom acquired Sprint for a record $115 billion, but the Department of Justice eventually blocked the merger on grounds that the deal would cut competition in some telecom services. MCI had edged out BellSouth in a deal that qualified as the largest takeover in history, and the new company would have combined the assets of the second- and third-largest long-distance companies, and featured an extensive wireless network. MCI-Sprint was to be the largest telecommunications company in the world.

...ends for good

In June 2000, Sprint CEO William T. Esrey announced for the first time that Department of Justice (DOJ) antitrust regulators might block the merger. Even if the DOJ approved the deal, the Federal Communications Commission as well as the European Commission, must both accept the plan. A mark of approval from Europe might have been difficult for Sprint and WorldCom to attain because the prospect of an Internet communications backbone dominated by a U.S. giant worried some regulators and leaders overseas. Later that month the DOJ filed to block the merger on antitrust grounds.

Sprint and WorldCom formally ended their $117.7 billion merger agreement in mid-July, citing that DOJ demands would compromise the financial benefits of the merger. The DOJ had blocked the merger because it believed the deal would harm competition in the long-distance market and stifle technological innovation.