MCI Communications Corp has pulled the rug out from under Mexican Telecommunications company Avantel SA, by shelving plans to invest a further $900m investment in the company. Avantel is a joint venture 45% owned by MCI with Groupo Finaciero Banamex- Accival SA, competing head to head with incumbent telecoms operator Telefonos de Mexico SA, Telmex. MCI, which has already invested around $900m in the company, but now has pulled out of a planned second round giving the excuse that Avantel is having to pay 70% of its revenues straight to Telmex in interconnect fees. MCI chairman Gerald Taylor has apparently complained to the Federal Communications Commission that Mexico is failing to compete. The accusation bears an uncanny resemblance to a complaint that MCI made against all the Regional Bells just after its announcement last July of $800m losses in it local operation, that fuelled the re-negotation of its merger with British Telecommunications Plc, and its eventual $37bn takeover by Worldcom Inc. In all probability MCI is just having to bite the financial bullet and stop investing its cash, as it seems to have had a lousy nine months, recently shown by its $752m worth of one-time charges in its fourth quarter (CI No 3,337).
