MCI Communications agrees to buy Nationwide Cellular

Corporate Growth Report Weekly, Jun 5, 1995

MCI Communications Corp. will acquire cellular reseller Nationwide Cellular Service Inc. for approximately $190 million. The transaction will permit MCI to supply cellular service to an initial 275,000 businesses and residential subscribers in 10 of the country's biggest cities including New York and Los Angeles.

Nationwide Cellular which dominates the $800 million-a-year reseller market, will provide a key role in MCI's long-range plan to profit from an expected future glut of wireless capacity by purchasing unused service from competitors and reselling it to customers -- thus bypassing the need to construct and operate its own cellular network.

However, the proposed deal could conceivably heighten the feud over deregulation legislation in Washington between cellular resellers supported by the Baby Bells and MCI. Today resellers are asking for provisions which would mandate cellular carriers to grant resellers improved link-ups and more comprehensive access to cellular networks, thus allowing them to lower their price by 30 percent. However, the Bells along with other cellular companies and in strong opposition to such provisions.

MCI began 20 years ago in part, by purchasing AT&T's long-distance service in bulk and thereafter reselling to other consumers. Today it aims to do the same in the wireless field.