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15 February 2005 Verizon, the largest regional phone company in the US, has agreed a deal for long-distance operator MCI in another US telco merger. The deal, worth nearly $6.8 billion, comes just two weeks after AT&T was also bought out.

The deal for MCI - formerly the infamous WorldCom - saw stiff competition amid prospective buyers: Verizon won agreement ahead of rival Qwest, despite the latter's higher bid of $7.3 billion, because of its stronger financial position.

Verizon chairman and CEO, Ivan Seidenberg enthused: "It is a natural and logical extension of Verizon strategy to transform our company to serve growth markets and offer broadband technologies."

Qwest has debt of $17 billion - more than twice its market value of $7.5 billion. Verizon, on the other hand, is worth $100.2 billion and owns 55% of Verizon Wireless, the US's second biggest wireless business.

MCI has 14 million residential and 1 million corporate customers in the USA. Verizon hopes to use MCI's nationwide and global Internet Protocol networks to gain more business customers. MCI also owns a huge fibre network which is the backbone of the Internet in the US.

The deal for MCI follows hot on the heels of telecom vendor SBC's purchase of AT&T and underlines the growing concern over the future of long distance operators. With new technologies such as wireless and Voice over IP biting into long distance revenues, European operators such as BT and Deutsche Telekom will be acutely aware of the need to find new revenue streams, or face becoming the next prey.

Meanwhile, Verizon has confirmed that MCI's CEO Michael Capellas will not have a role once the acquisition is complete. Some market watchers have already floated his name as possible replacement for Carly Fiorina at Hewlett-Packard (HP). Capellas spent several months in charge of operations at HP following its acquisition of Compaq. Fiorina was asked to step down as CEO of HP last week.