Solution Providers: WorldCom Back On Track


Though many partners received the boot from WorldCom during its bankruptcy filing, several partners still on board said the carrier--now known as MCI after reclaiming its original brand name--remains a significant threat.

The carrier filed its reorganization plan with the U.S. Bankruptcy Court Monday following an aggressive 100-day plan to cut costs, reduce debt and streamline the business. WorldCom Monday also officially changed its name to MCI.

On a call with the media Monday, Chairman and CEO Michael Capellas said MCI expects to emerge from bankruptcy by September or October of this year. The carrier asked the court to set a disclosure hearing for May 19. A confirmation hearing in August will follow this hearing, with a formal procedure for emergence to be in place by the fall, he said.

Capellas expects MCI to emerge with significantly less debt--about $4.5 billion to $5.1 billion, down from $30 billion the company claimed when it filed Chapter 11 in July 2002. Capellas said MCI would also emerge with about $1 billion in cash on hand and $350 million in capital leases.

When asked if thought it was unfair the new MCI would emerge with less debt, Capellas said he doesn't view the company as being in a privileged position just yet.

"It's hard for me to sit here and feel like we're in a privileged position," said Capellas. "The laws of the land as far as bankruptcy court is concerned are what they are," he said. "Do I think we're coming out with a better cost structure than we had when we went into this? Absolutely."

And partners tend to agree.

"They are going to emerge from bankruptcy with a lot less debt than competitors, and they have aggressive plans in place to take on a lot of markets," said Ted Schuman, CEO Of PlanetOne, a master agent and WorldCom partner based in Scottsdale, Ariz. "We expect new products to be delivered to us as early as next week, and the support we've been receiving from them has been consistent."

Capellas said MCI is tackling many market segments--consumers with aggressive, all-you-can-eat local and long-distance plans, the small- and midsize-business market, continued focus on the enterprise and a renewed focus on international markets.

"The reality is a really great company suffered at the hands of a few, and now we really need to get back on track with a great products, help create a competitive environment and lead with innovation," Capellas said.

The switch from WorldCom to the MCI moniker will help get the carrier back on track, said David Morken, president of Research Triangle Park, N.C.-based Bandwidth.com, a master agent and WorldCom partner.

"I'm in shock and awe over their turnaround," said Morken. "They are back on track and going back to the MCI name, which has always been known for credibility, was a wise move."