MCI sells US Net business to C&W

MCI has sold its entire US Internet business to Cable & Wireless (C&W) for $1.75bn (£1.1bn), giving the UK-based telco 250,000 consumer customers and 60,000 business customers.

The deal was announced on Wednesday evening, shortly after the US Department of Justice gave its blessing to the $37bn (£23.1bn) MCI/WorldCom merger.

Chris Lewis, principal analyst at the Yankee Group, said: "To get over a quarter of a million dial-up customers on a plate like that gives it a very good start. It takes most companies a long time to establish that kind of customer base. BT has still not reached that."

The deal follows weeks of speculation following the EC's statement that it would only bless the merger if MCI sold all its Internet concerns. C&W made an agreement with the telco to buy its Internet backbone services and Internet service customers for $625m (£391m) last month, but both the European and US regulators said this would not be enough.

After the announcement, C&W placed 112 million shares on the market in a bid to raise £887m net. Lewis commented: "It has been selling off its minority holding around Europe for a while now, so it should be in a strong position."