Financial: MCI WorldCom Q1 1999 Results, Earnings Per Share of $0.37, Compared with $0.10, Operating Margins Improve on Revenue Mix and Merger Synergies - Company Financial Information

EDGE, On & About AT&T, May 3, 1999

MCI WORLDCOM, Inc. (Nasdaq: WCOM) Thursday reported first quarter revenues, excluding Embratel, of $8.3 billion. On a pro forma basis, excluding Embratel, first quarter core communications services revenues increased 17 percent from $6.8 billion in 1998 to $7.9 billion in 1999. Strong gains in Internet, international and data communications services, combined with the impact of the MCI merger, drove the year-over-year increase in reported revenues from $2.3 billion for the first quarter of 1998. Including Embratel, total first quarter revenues were $9.0 billion, which reflects the impact of the over 30 percent currency devaluation in Brazil during the quarter.

Voice minutes, on a pro forma basis, increased ten percent year-over-year. Internet volume on a pro forma basis, as measured by connect hours, approximately doubled to over 900 million hours as compared with the first quarter 1998. Voice Grade Equivalents (VGEs), which capture the volume of local data circuits, increased 66 percent to 19.9 million VGEs.

Reported net income for the first quarter 1999, was $709 million or $0.37 per common share. Excluding Embratel, net income was $729 million or $0.38 per common share. Excluding Embratel and the gain of $67 million related to the sale of shares in Verio Inc. during the quarter, earnings per common share would have been $0.36. For first quarter 1998, reported net income prior to charges was $186 million or $0.18 per common share. On a pro forma basis, assuming the MCI merger and the CNS/ANS transactions occurred at the beginning of the earliest period presented, comparative net income for the first quarter 1998 was $169 million or $0.10 per common share.

Operating income for the first quarter 1999, excluding Embratel, was $1.45 billion -- an increase of 241 percent compared with $426 million, before charges, on a reported basis for first quarter 1998 and an increase of 140 percent compared with $605 million, on a pro forma basis, for the same prior year period.

Management's Comments on the First Quarter "This is an excellent start to the year and is indicative of how well the merger with MCI has progressed," said Bernard J. Ebbers, President and CEO of MCI WorldCom. "Our margin improvement and earnings performance are particularly impressive this early in the year. The divestiture of virtually all of our non-core assets has provided us with financial flexibility to further increase our capital investment in certain high growth areas -- particularly for Internet, local and international services.

"We believe this incremental capital spending combined with more aggressive selling and marketing efforts will continue to propel strong top-line sales growth in our core communications services for the foreseeable future."

Communications Services - Pro Forma Comparison MCI WorldCom's first quarter communications services revenues in the chart below, excluding Embratel, assumes that the MCI merger and the acquisitions of CNS and ANS occurred as of the beginning of the earliest period presented.

                      FIRST QUARTER
($ In Millions)

                                     Actual    Pro Forma
Revenues                              1999        1998      Change

  Voice                             $5,095      $4,754         7%
  Data                               1,702       1,304        31%
  Internet                             758         474        60%
  International                        357         230        55%
Communications services             $7,912      $6,762        17%

For the first quarter, the fastest growing revenues within core communications services were once again Internet, international and data services which accounted for 70 percent of the total incremental revenues. Over $800 million of incremental revenues are coming from these fast growing communications services which now represent over 35 percent of communications services revenues, or an annualized revenue stream of $11.3 billion, up 41 percent from $8.0 billion on a pro forma basis a year ago.

Domestic Voice revenues increased seven percent for the quarter. Long distance volume gains in commercial sales channels, combined with an increasing mix of local services were the primary contributors to this increase. These volume gains were offset partially by anticipated declines in carrier traffic, competitive commercial pricing, access charge reform pass throughs and changing product mix.

Domestic Data revenues increased 31 percent for the quarter. The particularly strong revenue growth for private line, frame relay, and ATM services continues to be fueled by tremendous commercial end-user demand for high-speed data and by Internet-related growth on both a local and long-haul basis.

Internet revenues for the first quarter were $758 million, an increase of 60 percent over the pro forma first quarter of 1998. Sequentially, the Company added $100 million in quarterly revenues, as compared with fourth quarter 1998. This represents the strongest sequential gain in Internet revenues in the Company's history and is indicative of how important Internet has become as a growth driver for communications services revenues.