Vodafone partner in £3.6bn deal

VERIZON Communications, Vodafone's US partner, is poised to buy long-distance carrier MCI with a $6.8bn (£3.6bn) bid.

MCI chief executive Michael Capellas is understood to have accepted the cash-and-shares offer after a tense battle for his firm between Verizon and rival Qwest Communications International.

Verizon and MCI's boards of directors are expected to announce their approval of the tie-up by the time trading in New York opens today to create a company with a combined market capitalisation worth over $100bn.

Verizon beat a last-minute counterbid from Qwest, which raised its offer to about $7.3bn in cash and stock, according to Reuters, after Verizon had originally bid $6.3bn. The deal is the latest in a frenzy of US telecom takeovers and comes barely a fortnight after AT&T agreed to a $16bn all-share takeover by local telephony company SBC Communications.

Like SBC, Verizon is one of America's socalled Baby Bells - regional telecom firms - which now serves a larger and more dense local market than the older, long-distance carriers like MCI.

Buying MCI brings Verizon access to a 98,000-mile network and a raft of lucrative corporate clients such as Hewlett-Packard to add to a telecom empire that already includes Verizon Wireless, its joint venture with Vodafone and the number two mobile carrier in the US.

Shares in Vodafone fell ¼p to 139¾p in early trading.