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MCI WorldCom, Cable & Wireless settle lawsuit

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LONDON--MCI WorldCom, the giant long-distance phone company, said it will pay $200 million to Cable & Wireless to settle a lawsuit about handing over customers from its Internet business that the U.K. company bought for $1.75 billion last year.

Cable & Wireless, the U.K.'s second-largest phone company, sued MCI WorldCom last year after it said growth at the unit had slowed 65 percent before the purchase was completed, and that it incurred more than $12 million in costs to recruit workers.

The U.K.'s company's purchase of the online business made it the second-biggest carrier of U.S. Internet traffic behind MCI WorldCom. Jackson, Miss.-based MCI WorldCom remains the world's largest Internet carrier, with its UUNet Technologies unit.

"We are pleased with the settlement and can now put this episode behind us," said Mike McTighe, chief executive of Cable & Wireless Global Operations. "The settlement of this dispute will enable us to totally focus on building on our unique position in Internet."

Cable & Wireless complained to the European Commission on the matter and last month the EU regulators said they are looking into Cable & Wireless's complaints. If they find that MCI WorldCom violated the terms of its approval, they could declare that MCI WorldCom's planned $127.3 billion purchase of Sprint illegal.

MCI was forced to shed some of its online businesses to get approval for the merger.

As a result of the settlement, Cable & Wireless has agreed to withdraw the lawsuit.

Copyright 2000, Bloomberg L.P. All rights reserved.

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