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February 1, 1998

WORLDCOM COMES UP WITH PLAN FOR UUNET

By CBR Staff Writer

The super acquisitive US telecommunications company WorldCom Inc has finally come up with a plan for its internet business, UUNet Technologies, in the confusing aftermath of the acquisition of Compuserve Corp by America Online Inc. UUNet will split into four divisions after the completion of the deal this weekend, reports the Wall Street Journal. WorldCom’s $1.2bn acquisition of Compuserve was a complex deal with the 2.6 million Compuserve subscribers traded with America On Line, for its network services business ANS Communications Inc. Worldcom retained the data business Compuserve Network Services and ANS, and also got given a lucrative five year contract to supply dial up services to AOL. Now, just before the proposed $37bn merger with MCI Corp, that holds a large internet business of its own, WorldCom is restructuring UUNet into four units: a division to deal with the dial up customers of AOL and Microsoft Corp’s Internet service the Microsoft Network; a flat rate business internet access service; a managed applications division for web hosting; and a fourth branch for selling global internet services. Worldcom is still waiting for merger approval from various bodies, including MCI’s shareholders, before it decides how to integrate MCI’s systems integration business Systemhouse, and its internet services arm. All these changes are going to take UUNet well away from its self declared market position of being a wholesale internet service provider.

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