IDT Interested in WorldCom Customers

With WorldCom swaying from a major governmental probe into its accounting practices, telecommunications firm IDT Friday detailed its $5 billion bid for the rival telco's assets.

by Clint Boulton of internetnews.com [July 8, 2002]

Newark, N.J.'s IDT is gunning for WorldCom's customers. To do so, it has devised a "stabilization plan" to help WorldCom customers transition to its own services so that they may receive "uninterrupted high quality telecommunications service in case of any shut down of the WorldCom network whether caused by bankruptcy, work stoppage, vandalism or any other unforeseen reason."

In a public statement, IDT Chairman Howard Jonas said: "We want WorldCom customers to keep their existing service. A business without customers doesn't have much value these days. We want to keep the customers at WorldCom, so it will still be worth something when we buy it or take it over."

The news comes two days after IDT made a $5 billion offer for WorldCom's MFS and Brooks Fiber units and MCI's consumer and small business long distance business. Jonas outlined the plan for the business world Friday, saying that the bid for WorldCom's assets would come in several pieces, the first of which will be $800 million in IDT stock.

Interestingly, IDT chose not to look at the stabilization plan as a marketing strategy to gain market share, and CEO Jim Courter said he was concerned about keeping as many customers at WorldCom as possible. Jonas said massive customer defections were underway.

"IDT's Stabilization Plan is only about stopping the hemorrhaging of customers at WorldCom and preserving competition in the telecommunications industry," Courter said. "We believe that everything is in place to make a deal, and we don't want customer attrition to get in the way, while negotiations between IDT and WorldCom and creditors move forward."

IDT's stabilization plan is two-tiered. In the first, customers of WorldCom's MFS and Brooks Fiber units can supplement their service by taking advantage of IDT's fixed broadband service, acquired from failed service provider Winstar, for back-up.

In the second part, MCI's consumer and small business long-distance customers can call IDT for special account numbers that will allow them access to the IDT long distance network, where they will pay the same or in most cases, less than they pay currently for MCI long distance. WorldCom customers can call 1-800-CALL-IDT for either IDT or Winstar service.

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