Qwest to up its bid for MCI

Qwest is set to sweeten its offer for MCI, according to published reports.

Qwest is currently offering $8 billion for the carrier, which has already agreed to a $6.7 billion bid from the more financially stable Verizon. Qwest is coming off an accounting scandal, burdened with $17 billion in debt and saddled with the least desirable region of any of the RBOCs. Qwest is also a weak player in the booming market for wireless services.

Next week, Qwest is expected to increase its offer for MCI, according to Reuters, citing unnamed sources "familiar with the situation."

The new bid would value the company at more than $24.60 a share and include more cash than Qwest's current offer, the Reuters report said.

Both Qwest and MCI declined to comment on the reports.

Some MCI shareholders have urged MCI to reconsider its agreement with Verizon and entertain the richer offer from Qwest. Verizon has given MCI until March 18 to consider Qwest's offer.

Qwest's new offer will keep a protection against a decline in Qwest's stock price, the Reuters reports states. 

If MCI chooses Qwest, it would have to pay Verizon $200 million to scrap their merger agreement.

Verizon and Qwest covet MCI's national and international network facilities, and installed base of large enterprise accounts.

Separately, the Wall Street Journal is reporting that ex-Qwest CEO Joseph Nacchio is facing civil charges from the SEC in connection with Qwest's accounting scandal of 1999-2002. Nacchio stepped down from Qwest in 2002.

The SEC had accused Qwest of falsely reporting sales of capacity on its fiber-optic network as recurring revenue. The SEC plans to file its charges next week against Nacchio and several other former Qwest executives for their role in the scheme.

Five months ago, Qwest agreed to pay a $250 million civil fine to settle SEC accounting fraud allegations. Qwest also had to restate financial results for 2001 and 2002 to lower revenue by about $2.5 billion.

This story, "Qwest to up its bid for MCI " was originally published by The Edge.

Copyright © 2005 IDG Communications, Inc.

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