By Siobhan Kennedy

MCI WorldCom Inc and Electronic Data Systems Corp are reported to be in talks to form a joint venture company to provide extended voice, data and systems services to global business customers. According to a report in the Washington Post, the deal could see EDS take over and manage all MCI’s international billing and information systems. For its part, MCI would take over all EDS’ telecoms-related business. As part of the alliance, which is said to be for ten years, some 8,000 staff at the telecommunications company would transfer over to EDS. Following the initial report on Tuesday, speculation has been circulating suggesting EDS will either inherit, or buy MCI’s computer services arm, SHL Systemhouse, as part of the deal. Spokespeople at MCI and EDS contacted by ComputerWire refused to comment yesterday, dismissing the news as rumor and speculation. As yet, no agreement has been reached, and the scope of the deal is still being determined, the Post said. The paper also quoted one MCI source as saying an announcement could come within two weeks: We’re close, but I don’t know that it’s a done deal, the source said. Industry analysts quoted in numerous press reports yesterday all seem to agree that the deal would make sense, particularly for MCI. They say MCI’s chief executive Bernard Ebbers wants the newly-merged company to focus exclusively on its telecommunications business and that the services arm is just dragging the giant down. One analyst, Dean Davison at the Meta Group, is quoted as saying that Systemhouse has been on the block for six to eight months. MCI WorldCom acquired Systemhouse in 1995 for $1bn but last quarter revenues fell 25%. Going forward, the division is expected to post $1.8bn in sales this year, which is small change compared to MCI’s overall expected $36bn in revenue for fiscal 1999. Reports claim that MCI is currently talking to several potential Systemhouse buyers. Potential candidates include local or long distance telecommunications companies – Bell Atlantic, Sprint, SBC Communications, Qwest Communications or Level 3 Communications – looking to ramp up their service offerings. But at the moment, the word on the street has it that EDS is the most likely suitor.