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Cost cutting helped MCI, the US telecommunications carrier targeted by a controversial takeover bid from Verizon Communications, return to profit in the latest quarter despite declining revenues.

MCI reported net income of $64m or 19 cents a share in the quarter to June 30, compared with a net loss of $2m or 1 cent a share in the first quarter this year. In the year ago period, MCI reported a net loss of $71m or 22 cents a share.

Revenues fell 10 per cent to $4.68bn. Sales of traditional voice products declined 12 per cent while data sales fell by 11 per cent and Internet product sales edged up by less than 1 per cent reflecting market competition.

Commercial accounts contributed $923m to revenues, down 8 per cent from a year earlier while consumer revenue fell by 19 per cent to $1.0bn reflecting the company's decision to withdraw from the mass market because of competition and regulatory changes. Sales to large companies fell 2.6 per cent, the smallest decline of MCI's three business units.

To offset these falls, the Virginia-based group led by Michael Capellas cut operating expenses by 11 per cent to $4.6bn. The savings reflected the impact of last year's restructuring efforts, a reduction in severance expense, lower bad debt expense and ongoing efficiencies in selling, general and administrative expenses, as well as lower depreciation and amortisation expense.

"In the second quarter, we continued to launch next generation products and services, improve customer service and realise results from our cost reduction initiatives," said Mr Capellas who pushed through a $8.46bn merger agreement with Verizon earlier this year despite a higher offer from Qwest Communications and shareholder opposition.

"In the second half of the year, we will remain focused on executing in the marketplace and moving toward a timely completion of our merger with Verizon," he said.

MCI has yet to set a date for the shareholder vote to consider the Verizon offer which is now expected to close next year. Verizon is in the process of seeking state and federal regulatory approval for the deal which was announced after rival SBC Communications agreed to acquire AT&T, MCI's biggest competitor.

■ Sprint, the third-largest US mobile carrier, said it plans to complete the purchase of Nextel Communications on Friday and stock of the combined company, to be known as SprintNextel, will start trading on Monday.

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