Filed by WorldCom, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: WorldCom, Inc.
Commission File No. 0-11258
November 2, 2000
THE FOLLOWING IS AN ANALYST PRESENTATION
THAT TOOK PLACE IN NEW YORK CITY ON
NOVEMBER 1, 2000
<PAGE>
[WORLDCOM LOGO]
Scott Hamilton
Vice President
Investor Relations
<PAGE>
FORWARD LOOKING STATEMENTS
The following presentations are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements concerning future operating performance, share
of new and existing markets, and revenue and earnings growth rates. Such
forward-looking statements, which are not a guarantee of performance, are
subject to a number of uncertainties and other factors, that could cause
actual results to differ materially from such statements, including vigorous
competition; the ability to establish a significant market presence in new
geographic service markets, and the success and market acceptance of new
products and services. For a more detailed description of the factors that
could cause such a difference, please see WorldCom, Inc.'s filings with the
Securities and Exchange Commission. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
[WORLDCOM LOGO]
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<PAGE>
CAUTIONARY STATEMENTS
We urge investors and security holders to read Form S-4, including the
prospectus and proxy statement, when they become available, because they will
contain important information. When these and other documents relating to the
transaction are filed with the U.S. Securities and Exchange Commission, they
may be obtained without charge from the SEC's website at http://www.sec.gov.
Holders of WorldCom, Inc. stock may also obtain each of these documents (when
they become available) for free by directing your request to WorldCom, Inc.,
c/o Investor Relations Department, 500 Clinton Center Drive, Clinton,
Mississippi 39056. This communication shall not constitute an offer to sell
or the solicitation of an offer to buy, nor shall there be any sale of
securities in any state in which the offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act.
[WORLDCOM LOGO]
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<PAGE>
CAUTIONARY STATEMENTS
WorldCom, Inc. and certain other persons referred to below may be deemed
to be participants in the solicitation of proxies of shareholders to adopt
the proposals which will be set forth in the proxy statement contained in
WorldCom Inc.'s Registration Statement on Form S-4. The participants in this
solicitation may include the directors and executive officers of WorldCom,
Inc., who may have an interest in the transaction including as a result of
holding shares of common stock and/or options to acquire the same. A detailed
list of the names and interests of WorldCom Inc.'s directors and executive
officers is contained in the Company's proxy statement for its 2000 annual
meeting, which may be obtained without charge at the SEC's Internet Website
at http://www.sec.gov.
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
Bernard J. Ebbers
President & CEO
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<PAGE>
WHY WE ARE HERE
Discuss the Formation of Two Operating Companies
Give Our Best Look at the Fourth Quarter and 2001
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM, INC.
MCI WorldCom
Consumer Data
Dial-Up Internet Dedicated Internet
Wholesale International
Paging generation d
Alternate Channels Business Voice
Focus: Cash Focus: Growth
[WORLDCOM LOGO]
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<PAGE>
WHY TRACKING STOCK?
Time to close Seamless to Customers
[up/down arrow] [up/down arrow]
Tracking Stock Structure
[up/down arrow] [up/down arrow] [up/down arrow]
Financial Flexibility Retain Scale Advantage Regulatory Certainty
[WORLDCOM LOGO]
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<PAGE>
SEPARATION BENEFITS
Clarity -- Predictability
- -
Shareholder Focused
Value -- Management
[WORLDCOM LOGO]
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<PAGE>
KEY OPERATING STRATEGIES REMAIN THE SAME
Aggressive Build-Out of Data Services Leadership in Internet Transport
[up/down arrow] [up/down arrow]
Protect Consumer Forefront of IP
Implementation
Market Share [left/right arrow] Key Strategies [left/right arrow]
[up/down arrow] [up/down arrow]
Global Expansion Attack New Markets
[WORLDCOM LOGO]
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<PAGE>
MCI
NASDAQ : MCIT
Consumer/Mass Markets [Graphic]
Wholesale Services [Graphic]
Dial-Up Internet Services [Graphic]
Paging
Prepaid Card
Optimize Long-Term Cash Flow
[WORLDCOM LOGO]
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<PAGE>
MCI
100 Percent Stock Dividend
- 1 Share of MCI for Each 25 Shares of WCOM
Tax-Free Distribution
$ 300 Million Annual Dividends Payable in June & December
[WORLDCOM LOGO]
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<PAGE>
MCI REVENUE MIX
3Q00 Data
Paging 3%
Alternative Channels 13%
Dial Internet 10%
Wholesale 20%
Mass Markets/Consumer 54%
[WORLDCOM LOGO]
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<PAGE>
MCI FINANCIALS
2001 Estimated
--------------
Revenue $15.2B
EBITDA $3.2B
Cash Flow* $2.0B
*EBITDA Less Interest Expense & Taxes
[WORLDCOM LOGO]
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<PAGE>
MCI FINANCIALS
2001 Estimated
--------------
Cash Flow $ 2.0B
Dividend $ .3B
CapEx $ .5B
Cash Available for Annual Debt Repayment $ 1.2B
*EBITDA Less Interest Expense & Taxes
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
NASDAQ: WCOM
Data
Dedicated Internet
Hosting
generation d Products
Wireless
International
Business LD Voice
Business Local Voice
[Graphics] Globe
An Enterprise Focused Growth Stock
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM REVENUE MIX
3Q 2000
International 27%
Dedicated Internet 11%
Voice 30%
Data 32%
[Graphic: Pie Chart]
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM REVENUE MIX
ESTIMATED FULL YEAR 2001
International 28%
Internet 13%
Voice 26%
Data 33%
[Graphic: Pie Chart]
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM REVENUE MIX
ESTIMATED FULL YEAR 2004
International 28%
Internet 24%
Voice 11%
Data 37%
[Graphic: Pie Chart]
[WORLDCOM LOGO]
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<PAGE>
OUR "MAJORS" STRATEGY
To Excel in High End, High Growth Areas
Continue Leadership in Data, Internet & International
Global VPN
Web Hosting & Related Services
Web Customer Service Centers
[WORLDCOM LOGO]
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<PAGE>
TIMELINE
S-4 Registration Statement Filed by Year End
Special Shareholder Meeting First Half of 2001
Regulatory Reviews None Expected
Stock Distribution First Half of 2001
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
Scott Sullivan
Chief Financial Officer
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<PAGE>
[WORLDCOM LOGO]
Today's Announcement Will Positively Change the Economic Behavior of Two
Distinct Businesses
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<PAGE>
TRACKING HIGHLIGHTS
Name WorldCom - Digital Company
MCI - Consumer / Long Distance Company
Exchange Ratio One MCI Share for Every 25 WorldCom Shares Held
Method of Effectively a 100% Stock Dividend
Distribution Tax-Free to Shareholders
Governance WorldCom, Inc. Board of Directors to Govern Affairs
of Both Stocks
[WORLDCOM LOGO]
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<PAGE>
FINANCIAL ALLOCATION
Fixed Assets MCI - US LD Switches, Call Centers & Dial
Modems WorldCom - Domestic & International
Metro & Long Haul Fiber Networks, UUNET
All Debt Held at WorldCom, Inc. Level
Debt Interest Allocated to Tracking Units Based
on Credit Profiles
$6 Billion to MCI at 8.50%
$17 Billion to WorldCom
Inter-Group Borrowings Intergroup Borrowings at Market-Based Spreads
[WORLDCOM LOGO]
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<PAGE>
SHAREHOLDER RIGHTS
Dividends MCI Annual Dividends of $300 Million
No Dividend Anticipated for WorldCom
Voting Group Percentage Voting Based On Market
Capitalization
Conversion MCI Can Be Converted at a Premium During
First 3 Years
Redemption Redeemable for Subsidiary Common Stock at
Option of Board of Directors
Rights
On Sale Distribution in an Amount Equal to Net
Proceeds Conversion at a Premium
[WORLDCOM LOGO]
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<PAGE>
SIZING OF THE BUSINESS
2000E Revenues
WCOM $23.0B
MCI $16.5B
[Graphic: Pie Chart]
2000E EBITDA
WCOM $9.5B
MCI $4.5B
[Graphic: Pie Chart]
Based on Estimated 2000 Results
[WORLDCOM LOGO]
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<PAGE>
INTER-GROUP RELATIONSHIPS
CLEAR & SIMPLE
Shared Network Infrastructure
Shared Corporate Overhead
Tax Sharing / Benefit of Consolidation
Transfer Pricing
Consolidated Corporate Credit Rating
[WORLDCOM LOGO]
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<PAGE>
MCI - FOCUS ON CASH
Strong Cash Generation:
Pay Dividends
Pay Down Allocated Debt
Minimal Reinvestment Required
Share Repurchase as Appropriate
Changed Behavior - Revenue Growth
Doesn't Drive Economic Value
[WORLDCOM LOGO]
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<PAGE>
MCI HIGHLIGHTS
1999 2000E 2001E
Revenue $ 16.2B $ 16.5B $ 15.2B
EBITDA 4.7B 4.5B 3.2B
Capex N/A N/A $ 500M
Substantial Debt Repayment
$300 Million Dividend
[WORLDCOM LOGO]
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<PAGE>
MCI HIGHLIGHTS
CREDIT RATIOS
1999 2000E 2001E
EBITDA/Interest Expense 9.4X 9.0X 7.0X
Total Debt/EBITDA 1.3X 1.3X 1.6X
Total Debt $ 6.0B $ 6.0B $ 5.0B
Investment Grade Profile Provides for
Long Term Dividend Pay-Out Ability
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM HIGHLIGHTS
1999 2000E 2001E
Revenue $ 19.2 B $ 23.0 B $ 25.7 - $26.4 B
EBITDA 7.6 B 9.5 B $9.0 - $9.4 B
Margin 39.5% 41.3% 34% - 36%
Cash EPS $ 1.14 $ 1.48 $1.25 - $1.35
Focusing on Long-Term Top Line Growth
with Reasonable Margins
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM HIGHLIGHTS
CREDIT RATIOS
1999 2000E
EBITDA / Interest Expense 10x 11x
Total Debt / EBITDA 1.6x 1.8x
Total Debt $ 12.1 B $ 17.0 B
Strong Investment Grade Profile Provides
Flexibility for Investment in Growth
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM GUIDANCE
2001E '01 - '05 CAGR
Target
Revenue $ 25.7 - $26.4 B 14% - 16%
12% - 15%
EBITDA $ 9.0 - $9.4 B 15% - 17%
Cash EPS $ 1.25 - $1.35 16% - 18%
Capex ~$8.0B
[WORLDCOM LOGO]
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<PAGE>
2001 CASH EARNINGS GUIDANCE
Cash EPS
WorldCom (per WCOM share) $1.25 - $1.35
MCI (per WCOM share) $0.25 - $0.30
$1.55 - $1.65
First Call 2001E Cash EPS $2.40
[WORLDCOM LOGO]
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<PAGE>
COMPONENTS OF CASH EPS GUIDANCE
4Q 00 2001
Previous WorldCom, Inc. Estimate $ 0.58 $ 2.60
Intermedia / Digex Impact (0.20)
------ ------
$ 0.58 $ 2.40
WorldCom
Investment for Growth (0.10) (0.35)
FX Effect (0.02) (0.05)
Global & Major Accounts Pricing (0.04) (0.10)
------ ------
------ ------
MCI (0.16) (0.50)
Consumer & Wholesale Pricing (0.06) (0.22)
Dial-Up Internet Traffic Mix (0.02) (0.08)
------ ------
(0.08) (0.30)
------ ------
Midpoint of WorldCom Inc. Guidance $0.34 to $0.35 $ 1.60
============== ======
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
John Sidgmore
Vice-Chairman
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<PAGE>
THE INTERNET -
What has changed?
Not Growth Potential
Not Our Desire to Build on Our Leadership Position
[WORLDCOM LOGO]
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<PAGE>
LESSONS
Internet Growth Continues
A Few in Each Space Will Succeed
Success Factors
Capital Access
Credibility
Speed to Market
A Real Business Model
[WORLDCOM LOGO]
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<PAGE>
THE INTERNET - - -
The Internet Changes Everything
Because It Offers - - -
Dramatic Change in Cost Structure
The Potential for Ubiquitous Access to Customers, Suppliers, Employees
And It Will Continue to Improve
Faster Than Other Alternatives - - -
[WORLDCOM LOGO]
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<PAGE>
E-COMMERCE MARKET SIZE
O Business-to-Consumer
O Business-to-Business
1998 1999 2000 2001 2002 2003
$43 Billion $109 Billion $251 Billion $499 Billion $843 Billion $1.3 Trillion
Source: Forrester Research Inc.
[WORLDCOM LOGO]
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<PAGE>
E-COMMERCE:
Are You Really Ready?
[Graphic - Circle representing Web Accounts] 2001 Estimate
Web Account for Less Than 5% of All Orders
[WORLDCOM LOGO]
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<PAGE>
E-COMMERCE:
Are You Really Ready?
[Graphic - Circle representing Web Accounts] 2004 Estimate
Web Accounts 65% of All Orders
Source: Forrester Research Inc.
[WORLDCOM LOGO]
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<PAGE>
B2B OPPORTUNITY
Growth of Online B2B Transactions & Associated Savings Through Exchanges
1998 1999 2000 2001 2002
$43 Billion $109 Billion $251 Billion $499 Billion $843 Billion
2003
B2B Transactions B2B Savings
$1.3 - 4.0 Trillion* $500 Billion**
[Graphic: Column chart showing potential growth savings for B2B Online
Transactions]
* Forrester Research; Gartner Group
** Giga Information Group
[WORLDCOM LOGO]
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<PAGE>
SAVINGS FOR WEB ENABLED
Cost Per Sales Interaction:
Direct Call - $277
Tradeshow - $62
Telemarketing - $31
Internet - $1
Cost Per Customer Service Interaction
In Person - $10.00
Call Center - $7.50
Voice Response - $2.45
Internet - $0.18
Order Processing Cost
Paper-Based - $8-25
Internet - $0.30-1.00
[Graphic - column chart showing cost comparisons of using the Internet
versus other means of communication available]
SOURCE: EStats; Business Week [WORLDCOM LOGO]
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<PAGE>
INTERNET MARKETING
& E-COMMERCE
The Internet Allows:
- A Level Playing Field
- Much Lower Marketing/Customer Acquisition Costs
- Dramatically Lower Advertising Costs
- Real-Time Knowledge, Analysis of Customer Habits
[WORLDCOM LOGO]
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<PAGE>
WHAT WILL HAPPEN DURING THE NEXT 24-36 MONTHS?
Broadband Brings More Internet
- Video Explosion
Wireless Data & Devices Grow
Voice
- Browsers
- Recognition, Activation
[Two Photographs]
[WORLDCOM LOGO]
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<PAGE>
BROADBAND ACCESS
Near Term Benefits
Provides Faster Downloads - Reduced Frustration
"Always On" Feature Provides More Natural Interaction
[Photograph of light bulb]
[WORLDCOM LOGO]
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<PAGE>
BROADBAND:
THE KEY TO THE PROMISE
Video Conferencing Multimedia Applications
Telecommuting Telemedicine
Distance Learning
[WORLDCOM LOGO]
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<PAGE>
NEW DEMAND DRIVERS
New Users
International
e-Commerce for Business
Broadband for Business
Wireless Data for Business
- Computer to Computer
Boring Corporate Applications
[WORLDCOM LOGO]
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<PAGE>
WIRELESS COMPUTING
Not Just Gadgets & Phones
Real Business Applications
Cars With Wireless IP Interfaces
Remote Automatic Order Entry
"Coke Machines"
Cost Structure Efficiencies
Better Customer Service
[WORLDCOM LOGO]
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<PAGE>
SUMMARY
The Internet Still Offers Explosive Growth -- BUT It Has Changed
Real Business Applications From Traditional Companies Will Drive Growth
- e-Commerce to Drive Cost Structure Efficiencies
- Wireless Data for Business
- Video Applications
Real Companies With Real Business Models Will Be Differentiated
WorldCom Sees the Internet/Digital World As More Central Than Ever
As More Traditional Business Applications Become Central to Internet
Growth--
We Must Change to Attack This Market With More Resources & More
Horsepower
[WORLDCOM LOGO]
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<PAGE>
"Would You Stop Breathing?
You've Got to Feel the Internet the
Way You Do About Breathing."
--JACK WELCH, CEO GENERAL ELECTRIC
[WORLDCOM LOGO]
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<PAGE>
TWO INDUSTRIAL EXPLOSIONS
Motorized
Transportation Era
1910 -1925
[Graphic - Photographs]
Internet
Communications Era
1995-2010
[WORLDCOM LOGO]
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<PAGE>
BRIAN BREWER
Senior Vice President
Marketing
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<PAGE>
KEY MARKETING PRIORITIES
Sync-Up Marketing, Product Strategy, and Positioning Between Business Units
Put Initiatives in Place That Will Fuel Revenue Growth Tomorrow(2001 and
Beyond)Shift Product Strategy from "Broad and Shallow" to "Narrow and
Deep" Drive External and Internal Change in Perception
[WORLDCOM LOGO]
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<PAGE>
THREE SOURCES OF GROWTH
Acquisition Geography
Products
[Graphic: Pie Chart]
[WORLDCOM LOGO]
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<PAGE>
TO CAPITALIZE ON OUR STRENGTHS & TO LEVERAGE OPPORTUNITIES
Continue Our Focus on Data Services
[WORLDCOM LOGO]
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<PAGE>
TRADITIONAL DATA STILL PROVIDES GREAT OPPORTUNITIES
Huge Volume Base to Grow 22% in 2000
$66B in 2003*
(B) $70
$60 [Chart detailing projected growth]
$50
$40
$30
$20
$10 Frame, ATM, PL, Packet
$0
'98, '99, '00, '01, '02, '03
*Source: Dataquest
[WORLDCOM LOGO]
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<PAGE>
TO CAPITALIZE ON OUR STRENGTHS & TO LEVERAGE OPPORTUNITIES
Continue Our Focus on Data Services
Expand Our Leadership Role in Internet Transport & Related Services
for an IP-Centric World
[WORLDCOM LOGO]
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<PAGE>
IP CONNECTIVITY PROVIDES GREAT OPPORTUNITIES
Domestic Internet Industry Revenues ($ Billions)
[Graphic - Chart]
Source: Probe Research
[WORLDCOM LOGO]
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<PAGE>
TO CAPITALIZE ON OUR STRENGTHS & TO LEVERAGE OPPORTUNITIES
- Continue Our Focus on Data Services
- Expand Our Leadership Role in Internet Transport & Related Services
for an IP-Centric World
- Declare Our Majors & Excel in These Selected High-Growth Areas
[WORLDCOM LOGO]
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<PAGE>
JUST WHAT IS A MAJOR?
Industry Leadership in a Product or Service
- Cisco in Routers
- Oracle in Internet DB
- Compaq & Sun in Servers
- Microsoft in Desktop O/S & Applications
[WORLDCOM LOGO]
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<PAGE>
CRITERIA FOR DEFINING OUR MAJORS
Strategic Importance to Our Customers
Opportunity Size Potential
- Multi-Billion-Dollar Global Opportunity in 3 Years
- Growth Potential
WCOM Share Potential
- Ability to Claim the #1 or #2 Share
Synergies/Complementary Fit
- Leverages Existing Assets & Strengths
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM'S MAJORS
Global Internet Virtual Private Networks
Web Hosting & Related Services
Web Customer Service Centers
[WORLDCOM LOGO]
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<PAGE>
VPN -
VIRTUAL PRIVATE NETWORKS
The Illusion of a Dedicated Private Network, Complete With Functionality
& Flexibility, at a Lower Cost
VPNs Are Software-Defined While Actual Private Networks Are
Hardware Based
- Better Network Control & Service Quality by Processing Traffic
Entirely on One Network
- Virtually Uninterrupted Service
- Consistent Global Features
[WORLDCOM LOGO]
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<PAGE>
A TYPICAL VPN
[Graphic detailing correlation between: Firewall, Analog, Remote Users,
ISDN, UNET, IP Infrastructure, Uusecure VPN CPE, Corporate LANS, Extranet
applications Customer, partners
[WORLDCOM LOGO]
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<PAGE>
WHAT GLOBAL VPNS
MEAN TO WORLDCOM
Opportunity
- $1.3B by YE'00, Growing to $6.1B by 2004
Growth
- 47% Average Annual Growth Projected
Synergies/Complementary Fit
- Necessary to Complement Private Frame/ATM
Capabilities, Synergistic With Other Majors
[WORLDCOM LOGO]
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<PAGE>
WCOM LEADS THE TRANSITION
FROM PRIVATE TO PUBLIC, MAINTAINING SECURITY & RELIABILITY
[Graphic detailing correlation between: FR/ATM, Gateway Services,
Private IP, Public IP, Frame, ATM, Relay, MPLS, IP VPN, Public, IP Service,
FR & ATM, Access]
<Legacy Carriers> <New Entrants>
<WorldCom Covers the Full Range>
[WORLDCOM LOGO]
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<PAGE>
HOSTING IS KEY
TO OUR CUSTOMERS
Web-Based Applications Are Essential
to Sales, Support, & Infrastructure
Access Required 24 Hours/Day,
7 Days/Week
Hosting Keeps the Applications Available So Businesses Can Run
[WORLDCOM LOGO]
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<PAGE>
WORLD CLASS HOSTING PARTNERSHIP ENABLING ENTERPRISE SOLUTIONS
HOSTING DIGEX
Custom
[Up/down arrows]
Managed
Dedicated/Shares
Co-Location
Digex Boosts Our Position in Managed Hosting by 12 to 18 Months
[WORLDCOM LOGO]
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<PAGE>
WE WILL LEVERAGE OUR NETWORK & "PUSH" THE BOUNDARIES OUTWARD- - -
Previously
[Graphic detailing correlation between: Frame/ATM, Private IP, Public IP]
Router
[WORLDCOM LOGO]
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<PAGE>
WE WILL LEVERAGE OUR NETWORK & "PUSH" THE BOUNDARIES OUTWARD- - -
Previously Now
[Graphic detailing correlation between:
Frame/ATM, Private IP, Public IP, Managed Hosting, Colocation]
Router
[WORLDCOM LOGO]
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<PAGE>
WE WILL LEVERAGE OUR NETWORK & "PUSH" THE BOUNDARIES OUTWARD- - -
Previously Now Soon
[Graphic detailing correlation between:
Frame/ATM, Private IP, Public, IP, Managed Hosting,Content Storage
& Caching, Colocation]
Router
[WORLDCOM LOGO]
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<PAGE>
WHAT HOSTING MEANS TO WCOM
Opportunity
- $2.8B by YE'00, Growing to $14.6B by 2004
Growth
- 51% Average Annual Growth Projected
Synergies/Complementary Fit
- Leverages Existing Base, IP Capabilities
- Synergistic With Other Majors
[WORLDCOM LOGO]
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<PAGE>
JUST WHAT IS A WEB CENTER?
Enterprise Applications & Data Sources
Email [right arrow]
Chat
Web
Voice [right arrow]
Wireless "Virtual" [Graphic]
Call
PDA [right arrow] Center
FAX
[Graphic]
[WORLDCOM LOGO]
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<PAGE>
WHAT WEB CENTERS
MEAN TO WORLDCOM
Opportunity
- $20M by YE'00, Growing to $1.7B by 2004
Growth
- 204% Average Annual Growth Projected
Synergies/complementary Fit
- Leverages Strength in 800/call Centers
Euro/Asia Trail
- Synergistic With Other Majors
[WORLDCOM LOGO]
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<PAGE>
BEING REALISTIC ABOUT WHAT IT TAKES TO GET THERE
Two to Four Quarter Lead-Time
- Launch & Train in Q4 '00
- Build Momentum and Continue Training Q1-Q2 '01
- Meaningful Results Q3 '01
- Solid, Sustained Growth Q4 '01
Investment
- People & Training
- Systems
- Marketing
[WORLDCOM LOGO]
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<PAGE>
OTHER SHORT TERM ACTIONS
Slow Rate Erosion
Demonstrate Leadership in Pricing
- Set-Up Fees
- "Floors" on Pricing & T/Cs for
High-Capacity Special Access Builds
[WORLDCOM LOGO]
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<PAGE>
CONTINUE TO DRIVE A CHANGE IN PERCEPTION - GENERATION D
"E" Is Strategic & on the Mind of Every CEO, CIO, and CFO
generation d Source Book
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
Ron Beaumont
President & CEO
Operations & Technology
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<PAGE>
TOPICS
Network Strategy
Capital Trends
Network Highlights
- Terabit Transmission
- Internet & Web Hosting Growth
- Managed VoIP
[WORLDCOM LOGO]
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<PAGE>
NETWORK STRATEGY
Increase Network Capacity & Scale Across All Platforms
Lower Capital Cost Per Unit
Increase Global Geographic Coverage
Enable Value Added Products & Services
- Web Hosting
- Content Distribution
- IP VPN
- generation d / e-Commerce
[WORLDCOM LOGO]
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<PAGE>
CAPITAL TRENDS
Narrowband Switching Declining
- Rapidly Approaching Maintenance of Existing Base
Transmission Increasing in Support of
- Internet Growth at 4X
- Hosting
- generation d Products
- Unit Cost Declining Dramatically
[Graphic - Photographs]
[WORLDCOM LOGO]
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<PAGE>
CAPITAL TRENDS
Data/Internet Platforms
- Modest Increase
- Unit Costs and Capital Utilization Improving Significantly
with Softswitch and MSS
Software
- Declining as Generation d Services Provide More Efficient
Platforms to Develop Products
[Graphic - Photographs]
[WORLDCOM LOGO]
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<PAGE>
CAPITAL TRENDS
Hosting
- Overall Investment will Decline
- Infrastructure Substantially Built in the U.S.
- Expand Internationally
- Investment Shifting from Infrastructure to Managed Services
[Graphic - Photographs]
[WORLDCOM LOGO]
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<PAGE>
CAPITAL TREND SUMMARY
While Transmission Volume Increases, Cost Per Unit Declines
Softswitch and MSS Lower Cost of Switching and Routing and Improve
Transmission Utilization
Investment is Transitioning to High Growth Areas Such as Hosting and
generation d Services and Network to Support Them
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
Terabit Transmission
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<PAGE>
TERABIT TRANSMISSION
Terabit Capacity Implemented in 4 Phases
- High Density Optical Pipes Regenerated Every 400 km
- Ultra-Broadband Cross Connects Introduced
- Optical Cross Connect Systems Introduced
- Ultra-Long Haul Systems Introduced
Regenerator Spacing Greater Than 1500 km
[WORLDCOM LOGO]
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<PAGE>
TODAY - DENSE WDM
32 Channels @ 10 GB
[right arrow] DWDM [right arrow] [left arrow] DWDM [right arrow]
City A City B
400 km REGEN
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<PAGE>
PHASE I - HYPER-DENSE WDM
Vendor A
160 Channels @10 GB
[Graphic detailing DWDMs]
City A City B
400 km REGEN
Vendor B
176 Channels @ 10 GB
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<PAGE>
PHASE II - ULTRA-BROADBAND CROSS CONNECT
160 Channels @10 GB
City A City B
[Graphic detailing Correlation between: [Graphic detailing Correlation between:
OC192, OC48, OC12, OC3, UBB, DWDMs] OC192, OC48, OC12, OC3, UBB, DWDMs]
176 Channels @ 10.GB
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<PAGE>
PHASE III - OPTICAL CROSS CONNECT SYSTEM
160 Channels @10 GB
City A City B
400 km REGEN
[Graphic detailing correlation between: OCCSs and DWDMs]
176 Channels @ 10 GB
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<PAGE>
PHASE IV - ULTRA-LONG HAUL SYSTEM
160 Channels @10 GB
City A City B
[Graphic detailing correlationb between: OCCS, and DWDMs]
@ 1500 km REGEN
176 Channels @ 10 GB
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<PAGE>
OPTICAL TECHNOLOGY IMPACT TO FIBER CAPACITY
Capacity Per Fiber Pair
12
10
8
6 [Graphic - Chart detailing increase]
4
2
.0
'95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05
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<PAGE>
[WORLDCOM LOGO]
INTERNET & WEB HOSTING GROWTH
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<PAGE>
INTERNET COVERAGE 2000
[GRAPHIC OF WORLD MAP]
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<PAGE>
INTERNET COVERAGE 2001
[GRAPHIC OF WORLD MAP]
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<PAGE>
WORLDCOM HOSTING - TODAY
47 Web Hosting Sites
350,000 Ft2 Floor Space
[GRAPHIC OF WORLD MAP]
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<PAGE>
WORLDCOM HOSTING - 2Q01
Investing $1.2B
By 2Q01: 82 Sites & 2.0M Ft[squared] Floor Space
[GRAPHIC OF WORLD MAP]
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<PAGE>
HOSTING
Collocation
- Customers Own Their Equipment
- Cages Dedicated to a Customer
- WorldCom Provides
A Secure Environment
Smart Hands Onsite
- Geography Dependent
(GRAPHIC THREE PHOTOGRAPHS)
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<PAGE>
HOSTING
Managed Hosting
- WorldCom Provides
All Equipment
Proactive Monitoring
24 X 7 Customer Support
Guaranteed SLAs
Network Security
- Geography Independent
Managed Hosting Has 8X Revenue Opportunity of Co-Location
(GRAPHIC THREE PHOTOGRAPHS)
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<PAGE>
[WORLDCOM LOGO]
MANAGED VoIP
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<PAGE>
TODAY
Customer Site WorldCom Network Customer Site
------------- ---------------- -------------
Switch Network
[Graphic detailing correlation between
VNET, PBX, Enterprise LAN]
Enterprise WAN
Voice IP
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<PAGE>
PHASE ONE - 2Q00 MANAGED VOIP FOR ENTERPRISE WANS
Customer Site WorldCom Network Customer Site
------------- ---------------- -------------
Switch Network
[Graphic detailing correlation between
VNET, PBX, Enterprise LAN, Enterprise Gateway]
Enterprise WAN
Voice IP
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<PAGE>
PHASE TWO - 3Q00 CALL ROUTING SERVICES
Customer Site WorldCom Network Customer Site
------------- ---------------- -------------
[Graphic detailing correlation between
VNET, PBX, Enterprise LAN, Enterprise Gateway, Switch Network, DAP, Dialing
Plans, SIP Server, IP Network, Enterprise WAN]
Voice IP
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<PAGE>
PHASE THREE - 4Q00 ON-NET TO
OFF-NET (NETWORK GATEWAYS)
Customer Site WorldCom Network Customer Site
------------- ---------------- -------------
[Graphic detailing correlation between
VNET, PBX, Enterprise LAN, Enterprise Gateway, Switch Network, Network
Gateway, DAP, Dialing Plan, SIP Server, IP Network, Enterprise WAN]
Voice IP
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<PAGE>
PHASE FOUR - 1Q01 ENHANCED FEATURES & IP PHONES
Customer Site WorldCom Network Customer Site
------------- ---------------- -------------
[Graphic detailing correlation between]
VNET, PBX, Enterprise LAN, Enterprise Gateway, Switch Network, Feature
Servers, Network Gateway, DAP, Dialing Plan, SIP Server, SIP Phone,
IP Network, Enterprise WAN]
Voice IP
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<PAGE>
SUMMARY
Network Capital Shifting to Support High-Growth Value Added
generation d Products
Network Growth Plan is Cost Effective & Will Scale to Meet Expected
Growth
Internet Backbone Is Increasing in Scale & Reach
Capital Investment for Web Hosting is Shifting from Infrastructure to
Managed Services
WorldCom Network Is Second to None in Quality & Cost Efficiency
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<PAGE>
[WORLDCOM LOGO]
Bob Hartnett
President
Global Sales
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<PAGE>
[WORLDCOM LOGO]
Sales Channels
Strategies for Growth
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<PAGE>
SALES APPROACH
Adapt to Acquisitions, Products, & Geographies
Position Sales Teams for Success in Each Channel
[Graphic with: Global, Corporate, International Corporate, US SMEs,
International SMEs]
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<PAGE>
US SME & CORPORATE ACCOUNTS:
LEADING THE INDUSTRY
1,800 Reps
Territory-Based for SMEs
Specialized Account Teams for Larger US-Based Enterprises
Full Product Range
- Focus on Data & Internet
- More Advanced Services As Opportunity Grows
Sales Force Automation
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<PAGE>
GLOBAL ACCOUNTS:
LEADING THE INDUSTRY
1,000 Multinational Accounts
850+ Sales Reps Worldwide
Coordinated Account Teams Worldwide
Providing All Products & Services, Including Customized Managed Services
Increased European & Asia/Pacific Quota Bearing Reps 4X in 2000
Sales Force Automation
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<PAGE>
UUNET:
LEADING THE INDUSTRY
Global IP Leader
2,500 Points of Presence
Operating on 5 Continents
1,000 Specialized Internet & Hosting Reps Worldwide
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<PAGE>
A UNIFIED SALES APPROACH
Combines Extensive Resources & Expertise
Accelerates Growth of IP Solutions for Entire Customer Base
Fully Leverages WorldCom's Assets
Combines Strengths in Data, Internet & International
Speeds Transition to generation d Solutions
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<PAGE>
CORE PRODUCTS
Data & Internet
- Frame Relay
- ATM
- Private Line
- Internet
Managed Services
- $1 Billion in Current Revenue
- Expanding Asia Pacific & European Presence
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<PAGE>
KEY INITIATIVES
Product Majors
- 150 Hosting Sales Experts
- 350 VPN Sales Experts
- Leveraging Call Center Expertise for Web Centers
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<PAGE>
GENERATION D TRAINING
76,000 Web-Based Sessions Completed By End of Year
Migrating from Private to Public Networks
Routing Protocols
Security Concepts
IP-VPNs
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<PAGE>
GLOBAL EXPANSION
Network Expansion Creates Opportunities
Correspondent Services Combine with Facilities for 200+ Countries
Lead with IP & Grow with Data
- Rest of Europe, Latin America, Asia
[GRAPHIC - WORLD MAP]
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<PAGE>
SALES APPROACH
Aligned in Customer-Centric Sales Channels
Focused on Data, Internet & International
Investing in High-Growth Initiatives
[WORLDCOM LOGO]
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<PAGE>
[WORLDCOM LOGO]
Liam Strong
President
International
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<PAGE>
WORLDCOM'S INTERNATIONAL BUSINESS
[GRAPHIC - WORLD MAP]
[WORLDCOM LOGO]
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<PAGE>
WORLDCOM EUROPEAN PHASE I STRATEGY 1998-2000
Build Wholly Owned Broadband Assets
Build Pan-European Sales Force
Build Customer Base with 'End to End' Services
- Direct/Indirect Voice
- Dedicated Leased Lines
- Internet
- International Frame Relay / ATM
Phase I Delivered on Schedule
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<PAGE>
EUROPEAN NETWORK BUILD: CURRENT STATUS
[GRAPHIC - WORLD MAP]
50 Switches, 38 Frame & 22 ATM Notes
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<PAGE>
EUROPEAN COMMERCIAL DEVELOPMENT
End 1999 End Q4 2000
Sales Force 627 845
Connect Buildings 9,891 14,938
Accounts 110,000 150,000
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<PAGE>
SMALL BUSINESS SECTOR
Definition: Less Than 100 Employees
Represents 70% of European Business Telecoms Market
450 Sales People in Europe
Small Business Sector Is Essential
for Continued Growth
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<PAGE>
WORLDCOM EUROPE PHASE II STRATEGY 2001-2003
Continued Sales Focus on Data & Internet
Launch the "Majors" in product set for the Corporate Market
Continue to expand in the Small Business Market
Move to Pan European Organisation : Customer Focus / Scalability
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<PAGE>
PRODUCT LAUNCH SCHEDULE EUROPE, 2001
Enhanced Voice
- Advance Toll Free
- Carrier Pre-Select
- Number Portability
Hosting Q1-Q3 Roll-Out
IP-VPN Development Q1 Onwards
Web Centres Q3 2001
WorldCom Will Have Both the Full Set of Standard
Products and an Advanced Set of High-Growth Products
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<PAGE>
WORLDCOM EUROPE PHASE II STRATEGY 2001-2003
Continued Sales Focus on Data & Internet
Launch the "Majors" in product set for the Corporate Market
Continue to expand in the Small Business Market
Move to Pan European Organisation: Customer Focus / Scalability
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<PAGE>
INTERNATIONAL'S CHALLENGES
Hiring & Training Data Capable Staff
Pricing Pressure on Gross Margin
Dollars to Sterling & Euro Exchange Rate
Scalable Systems
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<PAGE>
ASIAN STRATEGY
Offer Progressively:
- Phase I: Internet Access, International Data, International Voice
- Phase II: National Voice, Data and Hosting Expand Geographically
Behind De-Regulation
Data Networks and Internet Access the Priority
Invest in Data Centres to Service the Exploding Internet Sector
Buy Regional Cable Capacity
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<PAGE>
ASIAN DEVELOPMENTS
1999-2000
Operations In 10 Countries
237 Sales Heads
Customer Base Doubling Every 14 Weeks
Cables from US to Japan-China-Australia
US/China
US/Japan
US/Australia
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<PAGE>
SUMMARY
Europe:
Customer Focus & Additional Services
Asia:
Focus on Data / IP
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<PAGE>
[WORLDCOM LOGO]
Wayne Huyard
President
Mass Markets
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<PAGE>
CHARTER
Generate Cash to Support Dividends and Retire Debt
[WORLDCOM LOGO]
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<PAGE>
KEY STRATEGIES
Maintain Cash Flow With Strong Fiscal Management
- Optimizing Resources Across Enterprise Based on Margin
- Realizing Operating and Support Costs Synergies
- Stabilizing Rates
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<PAGE>
KEY STRATEGIES
Maintain Cash Flow With Strong Fiscal Management
Extend Cash Flow Through Minimum Capital Investment
- Improved OSS and Automation for Efficiency
- Advanced Platforms for Expanded Product Scope and Customer Care
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<PAGE>
KEY STRATEGIES
Maintain Cash Flow With Strong Fiscal Management
Extend Cash Flow Through Minimum Capital Investment
Accelerate Debt Repayment With Excess Cash Flow
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<PAGE>
OPERATING UNITS
[graphic: photo] [graphic: photo] [graphic: photo]
Mass Markets Wholesale SkyTel
[graphic: photo] [graphic: photo]
Internet Dial Alternate Channels
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<PAGE>
THE BUSINESSES
3Q00 Revenue
$2.5
$2.0
$1.5 [Graphic - Chart]
$1.0
$0.5
$0.0
Mass Markets Wholesale Internet Dial Alternate Channels SkyTel
Revenue EBITDA
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<PAGE>
MASS MARKETS:
A STRONG FOUNDATION
Superior Marketing & Sales Capabilities
Proven Success in Expanding Margins
Industry-Leading Results in Long Distance
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<PAGE>
MASS MARKETS:
STRONG FOUNDATION
Consumer LD Revenue Share Change 2000 vs 1999
Graphic detailing share change:
MCI: 1.2%;
AT&T: -3%
LECs: .6%
Sprint: .2%
InterLATA & IntraLATA
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<PAGE>
PRIMARY MARKET OPPORTUNITY
Consumer [Graphic - pie chart of $40 B: (Consumer LD) and $35B (Consumer Local)
LD
Consumer
Local
$75 Billion
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<PAGE>
STRATEGIES IN LONG DISTANCE
Stabilize Rate
Diversify Revenues
Increase Market Share
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<PAGE>
STRATEGIES IN LOCAL
Measured Investment in State Entry Capabilities
Employ Defensively to Preserve Long Distance Profits
Pursue Profitable State Entry Plan
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<PAGE>
NEW YORK EXPERIENCE
MCI WorldCom Entered Local Market in 2Q99
Verizon Entered Long Distance Market in 1Q00
Unbundled Network Element Platform Entry Approach
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<PAGE>
FIRST STATE: NEW YORK
NYLD NY Local
Customers Customers
1.4 450
5% Share 400
1.2 Gain 350
300 7% Share
1.0 250 Gain
200
0.8 150 [Graphic - Chart]
100
0.6 50
0
0.4 1/99 12/99 9/00
0.2 [Graphic - Chart]
0.0
1/99 12/99 9/00
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<PAGE>
STRATEGIES IN WHOLESALE, INTERNET DIAL & ALTERNATE CHANNELS
Prioritize Cash Flow Over Revenue
Restructure Unprofitable Accounts
Recognize Pricing Opportunities
Pursue Operating Efficiencies
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<PAGE>
[WORLDCOM LOGO]
MCI
The Priority is Cash
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