MCI receives increased offer from Verizon; MCI board concludes it is superior

MCI, Inc today announced that its board of directors has unanimously determined that a revised offer from Verizon Communications Inc is superior to the offer received from Qwest Communications International Inc on 21 April.

Verizon`s revised offer provides at least $26 per MCI share comprised of $5.60 in cash, which would be paid upon approval of the transaction by MCI`s shareholders, plus the greater of 0.5743 Verizon shares for every share of MCI common stock or Verizon shares or cash valued at $20.40. While MCI shareholders benefit from a "floor" of $20.40, they also benefit from the upside potential of an increase in Verizon`s stock price.

In making its determination and in assessing the latest offers from Verizon and Qwest, MCI`s board carefully weighed the expected range of potential values for MCI`s shareholders under each offer as well as the risks to achieving those values.

In comparing the financial terms of Verizon`s revised offer to Qwest`s offer, MCI`s board considered the following factors, among others: the changing competitive nature of the telecommunications industry and the expected competitive position of a combined Verizon/MCI versus a combined Qwest/MCI; the increasing need for scale and comprehensive wireless capabilities; reduction of access costs; the level and achievability of synergies; the size of Qwest`s contingent liabilities and the risks associated with those liabilities; the range of possible values for tax savings that could result from Qwest`s net operating losses; relative strengths of Verizon`s and Qwest`s capital structures; the ongoing ability to sustain network service quality both prior to consummation and in connection with achieving promised synergies; the capacity and commitment to and invest in new capabilities; and ensuring ongoing customer confidence among MCI`s large enterprise and government customers.

In addition, MCI`s board noted that a large number of MCI`s most important business customers had indicated they prefer a transaction between MCI and Verizon rather than a transaction between MCI and Qwest. Additionally, as their contracts come up for renewal, a number of customers have also requested rights to terminate their arrangements with MCI in the event of a Qwest transaction. These customer concerns, in the board`s view, pose risks in connection with a Qwest transaction that could negatively impact the value of the equity stake in a combined Qwest/MCI to be received by MCI`s shareholders under Qwest`s offer.

"From the standpoint of risk versus reward, Verizon`s revised offer presents MCI with a stronger, superior choice," said Nicholas deB. Katzenbach, MCI board chairman. "Shareholders receive enhanced value with greater assurance that the transaction will create additional shareholder value."

On 21 April 2005, Qwest presented MCI with a revised offer comprised of $16 in cash (excluding MCI`s 15 March dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14 provided Qwest`s share price is between $3.32 and $4.15) per MCI share.

On 29 March 2005, MCI and Verizon amended their merger agreement. Under that agreement, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 in cash (excluding MCI`s 15 March dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI common stock or Verizon shares or cash valued at $14.75.