UUNet phones MFS to seal Internet deal

In a deal worth $2 billion, UUNet Technologies is merging with MFS Communications, a US telephone and communications company.

The deal is the largest of its kind and the latest in a series of shake-ups in the Internet access field.

One of the immediate benefits for UUNet will be greatly reduced costs for local telephone services, which make up an estimated 40 per cent of its operating costs. UUNet chief executive officer John Sidgmore said: 'We see this merger as a natural evolution of our Internet vision, with a high capacity, fibre optic infrastructure supporting a full array of services and technologies.'

The new company will have an estimated turnover of $1.02 billion, 50,000 business customers, 543 points of presence worldwide and will offer Internet voice, data and video services. It will be the only Internet provider that owns or controls local fibre optic loops as well as intercity and undersea networks in the US, the UK, France and Germany.

Last year UUNet became one of the largest Internet service providers in the UK through its acquisition of Unipalm Pipex.

The merger highlights a move towards Internet-based technology increasingly being used for business networks and intranets. James Crowe, MFS chairman and chief executive officer, said: 'We are convinced that networks based on Internet technologies will become a bigger part of the business communications market. The combination of our fibre optic networks and UUNet's Internet services is a match made in heaven.'