SBC made Sept. payment of $2.4 million to U.S. Treasury -- down from $3.8 million last month -- for not meeting all performance measures required under its merger with Ameritech. Verizon paid $1.5 million on Tues. (CD Sept 27 p4). SBC said payments had continued to decline and now were half of what company paid in Jan., reflecting improvements in wholesale service to competitors. Company said it had to meet 360 performance measurements disaggregated into some 20,000 submeasurements. Each month it provides results of those measurements to every CLEC in every state in its territory, company said, making it responsible for tracking nearly 3 million submeasures. Some measures are so specific that if SBC misses deadline by few hours it has to pay fee, company said.
Verizon paid $1.52 million to U.S. Treasury Fri. for not fully meeting wholesale provisioning conditions established in FCC’s approval of Bell Atlantic-GTE merger last year. This was first payment made by Verizon -- and first time it was eligible for possible payment. Payment cycle for Verizon clicked in when company failed to meet conditions for 3 months in row, starting in April, and Fri.’s payment was for first such time period -- April, May and June. Verizon official said it was almost impossible to have 100% compliance because there were so many metrics that are measured on company’s providing of service to competitors. Spokesman said payment actually indicated high level of service because it was much lower than maximum payment of $21 million. He said 3 problem areas triggered payment: (1) Percent of time Verizon provided special access unbundled network elements (UNEs) within given time. (2) Percent of repeat trouble reports on any given line in 30-day period. (3) Average days of delay associated with providing UNEs and resale. Meanwhile, SBC paid $3.8 million under conditions of its merger with Ameritech but issued statement saying that was half of what it had to pay in Jan. SBC said its service had been improving but metrics were so specific that “no company could be measured in such minute detail without turning up areas that fall short of perfection.” SBC said it had 360 performance measurements “that are disaggregated into over 20,000 submeasurements.” All of those measurements have to be provided for every CLEC it does business with in every state, SBC said.
New Skies said Thurs. it had doubled net income in 2nd quarter. It said revenues for 2nd quarter were $53.2 million, up from $45.1 million in same 2000 period, and net income increased to $8.1 million from $3.8 million. New Skies Satellites said arbitration panel ruled in its favor in dispute with Astrium over construction contract for KTV satellite that New Skies said wasn’t delivered on time in 1999. Decision by New Skies to terminate contract with cause was proper, 3-member arbitration panel ruled. New Skies now is entitled to return of $53.25 million.
Moody’s cut Lucent debt rating to “junk” status Tues. with warning it may cut rating again over concerns of company’s ability to raise cash. Agency cut senior long-term debt to “Ba1,” its highest junk grade, from “Baa3” and Lucent commercial paper, or short-term debt, from “Not Prime” from “Prime-3.” Cuts affect $3.8 billion of Lucent debt. Company faces “more protracted downturn” and may not be able to sell its fiber cable division fast enough and for enough money, Moody’s said. Lucent also faces Sept. 30 deadline to raise $2 billion to finish spinoff of Agere Systems optical components unit. Standard & Poor’s cut equivalent ratings for Lucent to junk June 12.
Loral-Globalstar Chmn. Bernard Schwartz will give up his duties as head of Globalstar once successor is found to run fledgling satellite telephone network, as company edges toward brink of bankruptcy. Schwartz said he wanted to spend more time concentrating on core businesses of Loral, which has been hurt by problems at Globalstar. Schwartz said decision to step down was result of Loral effort to salvage Globalstar, which appeared to be on life support with stock trading as low as 41 cents at midday Tues. Nasdaq has threatened to delist stock if shares continue to trade below $1 for 10 consecutive days, SEC filing said. Company also faces lawsuit by Alcatel in U.S. Dist. Court, N.Y., after Loral terminated broad teaming arrangement.
Singapore Telecom (SingTel) offered $3.8 billion for remaining stake in Australia’s Cable & Wireless Optus Ltd., buying 52.5% from U.K.’s Cable & Wireless (C&W). Companies said transaction valued equity of Optus, 2nd largest telecom carrier in Australia, at $4.66-$5.38 billion. Deal would deconsolidate Optus and $1.08 billion of its debt from U.K.’s C&W, realizing $3.5 billion from parent Cable & Wireless. Singapore Telecom will pay parent C&W in combination of cash, reduced debt and SingTel bonds. C&W and SingTel said they expected to close deal this summer. Terms constitute prebid agreement in which SingTel agreed to accept 19.9% of Optus shares, maximum amount allowed by Australian law at this stage of deal. Optus has 4 million customers in Australia and offers wireless, data and IP services, broadband local and long distance telephony, Internet and pay-TV. Offer is conditioned on more than 50% shareholder acceptance and regulatory approvals. Moody’s placed senior unsecured and short-term ratings of debt guaranteed by Optus on review for possible upgrade. Moody’s said review would focus on likelihood that SingTel would acquire majority stake and potential impact of acquisition on its credit profile. Vodafone reportedly withdrew from bidding for Optus over weekend, with SingTel coming in with offer that was 13% above Optus closing price of $2 per share in Australia Fri.
WorldCom said its Internet and data revenue jumped 15% in quarter ended Dec. 31 but net income for overall company plunged 44% to $726 million from $1.3 billion year ago. While continued long distance pricing pressures pinched profits, WorldCom said revenue increases were driven in part by 28% year-over-year growth in data and Internet services. For 2000, international services revenue rose 29%. Based on recent restructuring, company reported financial results separated by high-growth data operations of WorldCom group and MCI Group long distance unit. For latter, revenue in quarter dropped nearly 9% to $3.8 billion from $4.2 billion year earlier. MCI Group saw growth in consumer subscription long distance and local services businesses, offset by lower revenues from transaction brands and calling card service. Services such as calling cards are seeing fall-off as more customers migrate to wireless plans, company said.