At the 36th annual Deposit Guaranty Economic Symposium--The Year Ahead in Jackson last week, Bernie Ebbers, president and CEO of MCI WorldCom, talked about adding a net of 8,000 employees a year to keep up with the growth rate of the global telecommunications giant.
He also mentioned wanting a hockey franchise, hinting that there was enough room near WorldCom headquarters in Clinton to build an arena. Ebbers emphatically denied any interest in running for governor in 1999 even though he wouldn't say whom he supports.
The merger of MCI and WorldCom has gone even better than expected, he said. However, on the heels of his announcement of a few thousand new hires annually, he also said about 75,000 duplicate jobs will be eliminated "for the sake of the shareholders," he said.
"Many mergers do not occur without having to deal with duplications," he said.
From humble beginnings...
MCI WorldCom began as a concept on a dinner napkin at Western Sizzling restaurant in Hattiesburg in the early 1980s. (AT&T was divested in 1983.) With south Mississippi as its first customer base, the company, then LDDS, grew from a reseller of services to the world's largest facility-based telecommunications company via numerous acquisitions. Initially acquiring Wiltel, a network and fiber builder, the company gained 20,000 miles of fiber. The next purchase, IDB, was the satellite equivalent. Then, WorldCom purchased MFS Brooks, UUNET and MCI, with 47,000 long distance route miles in 100 local city markets, to become MCI WorldCom.
"We have more fiber than AT&T has," Ebbers said.
The 1996 Telecommunications Act granted the company an opportunity to provide local service dial tone. WorldCom set and achieved the lofty goal of providing 70% of the dial tone service to U.S. business communities.
WorldCom's venture into Europe has provided the most extensive network with 2,000 miles of fiber.
"We didn't know (Daimler) Benz would hook up with Chrysler," Ebbers said. "That made it even better."
WorldCom's real estate strategies have paid off, too. Their goal to purchase "more real estate than we need," he said, has led to profits such as "selling unused parcels in San Antonio for seven times what we paid."
Whether on real estate owned by MCI WorldCom in Tulsa, San Antonio, Virginia or Colorado Springs., where "there's no inherent large employee base, therefore, lots of empty space," modules are planned that can be quickly added to as the company, employees and revenues grow, Ebbers said.
Building value
A $100 share of stock purchased when the company went public in 1989 is now worth $6,164. During the same 10-year period, BellSouth's stock growth comes closest, at $1,310. GTE falls next, worth $566. The same $100 share purchased in 1989 with Sprint would be valued at $375, and with AT&T, it would be $317, he said.
"Size alone was never the motive for acquisitions, but size as it relates to shareholder value was," he said.
The market cap in 1989 was $26 million. In 1998, it was $131.5 billion.
With a market opportunity of more than $700 billion, MCI WorldCom can gain a 20% growth rate by increasing only 4% to 5% of the market share, he said.
"We'd have to really screw up for our revenues not to grow," Ebbers said. "Only one statistic matters -- new bill revenue. Without that, the value of mergers, capacities, none of it matters."
The Internet market grows at a rate of 1,000% annually, he said.
"We will continue to expand the capabilities of our network, not by adding fiber, but adding more capabilities to fiber because customers want bundled services," he said.
Ebbers shrugged off the importance of the wireless market, because of a lack of demand for wireless components, he said.
"Wireless services are a talking service and cannot handle a capacity for information," he said. "By 2002, about 2% of total communication will be voice because the Internet and data services are growing so much faster."
MCI WorldCom currently resells wireless services.
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