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Will MCI rise successfully from WorldCom’s ashes?

Apr 21, 20032 mins
Internet Service ProvidersNetworking

* The impact of MCI's rebirth

WorldCom, now known as MCI (again), had a big week last week. The troubled carrier filed its reorganization plan, hired a new chief financial officer and moved its headquarters from Clinton, Miss., to Ashburn, Va., (see link below).

The carrier’s filing with the Federal Bankruptcy Court in the Southern District of New York, was expected and predicted by CEO Michael Capellas when he announced the company’s 100-day plan in January. The filing was the first step in MCI’s three-year roadmap.

The carrier is desperately trying to move away from the accounting scandal that came to light just before it filed for bankruptcy last year – the largest corporate bankruptcy case in history.

Last week, Capellas and his team put together an employee Webcast that was nothing if not festive and organized analyst and press conferences to discuss the company’s future, not its tainted past.

A keen focus on the future of MCI is certainly the way to go, but some still question if its plans will go far enough.

MCI says that its revenue for 2003 will total $24.5 billion, which is a 14% decline compared to last year. While this figure isn’t surprising to anyone who has been watching the company, what is surprising is its predictions for growth.

The carrier says that revenue will grow by 4% next year to $25.8 billion and by 8% in 2005 to $27.8 billion.

The company says it will be able to increase revenue by continuing to provide a reliable network, strong customer service and innovative offerings for its customers. And it’s fair to say especially to its business customers, where MCI is expecting the most growth.

But industry watchers question the carrier’s ability to do that with its stated capital expenditures over the next three years. The company says its capital expenditure will total $1.2 billion by yearend and $2 billion annually by 2005.

We’ll dive a little deeper into these questions next time.