Verizon has beaten a larger bid from rival Qwest for MCI in rapid response to the acquisition of AT&T by SBC.
Verizon has agreed to acquire MCI for $6.75 billion in cash and shares. The acquisition will require regulatory approval, which could take around a year.
As predicted by informitv, the purchase of MCI was prompted by a $16 billion deal two weeks previously between SBC and AT&T.
“This is the right deal at the right time,” said Verizon chairman and chief executive Ivan Seidenberg. “It is a natural and logical extension of Verizon’s strategy to transform our company to serve growth markets and offer broadband technologies.”
The companies say that they will determine organisational structure and branding strategies as the transaction moves closer to closing.
MCI emerged from the bankruptcy of WorldCom a year ago, following an accounting scandal, and needed to find a prospective buyer.
The US telephone sector is rapidly consolidating into a number of carriers proposing to offer local, long-distance, wireless, voice, video and data services.
Both Verizon and SBC are planning to invest billions in their networks to deliver video and interactive services to compete with cable television companies. Both companies have selected Microsoft TV software to deliver IPTV or internet protocol television services.