The rate at which consolidation is progressing in the still embryonic Internet business, all the surviving players will be mature companies that have gone ex-growth in only a couple of years. This week’s lead deal sees MFS Communications Co Inc, the Omaha, Nebraska-based former Metropolitan Fiber Systems, created by construction company Peter Kiewit & Sons, eating UUNet Technologies. MFS, which has built Metropolitan Area Networks in most major US cities, is busy cabling London and other UK cities and has a foothold on the continent, has agreed to pay 1.777776 MFS shares for each UUnet out, valuing the company at a whopping $2,000m, compared with annual sales running at under $200m – UUnet just reported $233,000 net profits on $43m revenue, up 186%, for the first quarter. Microsoft Corp, with 13% of UUnet, Fairfax, Virginia its preferred Internet access provider, supports the deal. The news caused shares in other Internet access providers to soar. MFS, which claims to have built the first US-wide Asynchronous Transfer Mode network, looks for big savings as UUnet transfers traffic to the MFS network.
