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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 1996
MFS COMMUNICATIONS COMPANY, INC.
(Exact name of registrant as specified in charter)
Delaware 0-21594 47-0714388
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3555 Farnam Street, Omaha, Nebraska 68131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 402-977-5300
Not Applicable
(Former name or former address, if changed from last report)
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Item 5. Other Events
On May 7, 1996, MFS Communications Company, Inc. (MFS) announced that
it plans to undertake a series of initiatives designed to position MFS to take
advantage of opportunities created by changes in telecommunications laws and the
rapid development of Internet-based communications networks. In response to
these new opportunities, the Company intends to undertake certain initiatives
which involve increasing the number of cities served, expanding its networks in
existing cities, constructing or acquiring its own intercity high capacity
network, accelerating central office interconnection, deployment of additional
switches, and providing high-speed local Internet access. Further information
relating to these initiatives is contained in the MFS Press Release of May 7,
1996, which is filed as an exhibit to this Report and incorporated herein by
reference.
This announcement contains forward looking statements that involve
risks and uncertainties, including risk of changing market conditions,
competitive and regulatory risk associated with the telecommunications and
Internet industries, and other risks detailed from time to time in the SEC
annual reports filed by MFS, including the report on Form 10-K filed by MFS for
the year ending December 31, 1995. Actual results, events and performance may
differ materially.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of businesses acquired: None.
(b) Pro Forma financial information: None.
(c) Exhibits:
99.1 Press Release of MFS Communications Company, Inc., dated
May 7, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MFS COMMUNICATIONS COMPANY, INC.
/s/ Terrence J. Ferguson
Terrence J. Ferguson
Senior Vice President, Secretary
and General Counsel
May 10, 1996
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EXHIBIT INDEX
Exhibit Page
10.1 Press Release of MFS Communications Company, Inc., dated
May 7, 1996
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Exhibit 99.1
MFS ANNOUNCES NEW INITIATIVES
Moves Aimed At Capitalizing on Telecom Act and New
Internet Technologies
Omaha, Nebraska, May 7, 1996 - MFS Communications Company, Inc. (MFS) today
announced that it plans to undertake a series of initiatives designed to
position the Company to take advantage of opportunities created by changes in
telecommunications laws and the rapid development of Internet-based
communications networks.
"We believe that a shift in the nature of communications is occurring which is
as fundamental as the change from telegraph to telephone," said James Q. Crowe,
Chairman and Chief Executive Officer of MFS. "Internet-based technology makes it
possible to communicate in whole new ways, and at far lower cost than was
previously possible. We further believe that the pending UUNET merger -- which
combines their acknowledged expertise in Internet-based business communications
with the tremendous capacity of MFS' optical fiber transmission network
- -uniquely positions the merged company to benefit from this communications
revolution.
"Recent regulatory and legislative changes, as well as the shift to Internet
technology, have created a number of new opportunities for the Company. The
Telecommunications Act of 1996 requires incumbent local phone companies to enter
into pro-competitive arrangements with MFS throughout the United States.
International regulatory reforms, particularly in Western Europe, are
accelerating and will enable the Company to compete as a facilities-based
service provider more quickly than previously anticipated.
In response to these new opportunities, the Company intends to undertake certain
initiatives which involve increasing the number of cities served, expanding its
networks in existing cities, constructing or acquiring its own intercity high
capacity network, accelerating central office interconnection, deployment of
additional switches, and providing high-speed local Internet access.
Construction and Expansion of Networks
The Company plans to expand the number of U.S. cities served to approximately 85
over the next two to four years. This number is up from the previously planned
target of approximately 65 cities, 45 of which are currently in operation or
under active development. In addition, the Company plans to construct
approximately 35 major expansions to existing city networks. Taken together with
the aforementioned regulatory changes, MFS believes that upon completion these
initiatives will enable the Company to sell its services to approximately 70% of
the U.S. business market.
The Company also intends to increase the number of international financial
centers served to 45, up from the previously planned 25 cities, seven of which
are currently operational or under development. A number of the cities are
expected to be developed in Asian countries where regulatory reform has created
new opportunities to serve the needs of communications intensive
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business customers. The pace of international city development is dependent on a
number of factors including the speed of regulatory reform.
Intercity High Capacity Network
The Company currently leases U.S. and international long distance connections
from other providers, the cost of which represents a significant portion of the
Company's network expense. The Company intends to build or acquire its own U.S.
and international intercity and transoceanic fiber optic networks, to be
deployed over a two to four year period. In accordance with this strategy, MFS
has begun construction of intercity connections along the Eastern seaboard with
the intent of linking the Company's city networks from Washington, D.C. to
Boston. Deployment of intercity networks with high speed SONET (or
internationally, the equivalent SDH standard) equipment is expected to lower the
cost of long distance connections and, in combination with MFS' high capacity
local networks, enable it to provide a range of new Internet-related services,
including, over time, high quality voice and video communications service.
Central Office Interconnection and Switch Deployment
The Telecommunications Act of 1996 mandates that local exchange carriers
throughout the country enter into arrangements with competitors such as MFS for
central office collocation and unbundling of local services. The Company
believes that implementation of these pro-competitive policies creates a unique
opportunity to provide a full range of local and long distance services through
interconnection with local exchange carriers. The Company has notified 21 local
exchange carriers of its intention to enter into collocation agreements in
specific MFS cities and has dedicated approximately 100 employees to the task of
negotiating and implementing such arrangements. The Company plans to
interconnect at LEC central offices in all its network cities and plans to
deploy approximately 25 additional local switches over the 25 previously
planned.
Internet Opportunities
On April 30, 1996, the Company and UUNET Technologies, Inc. jointly announced
the execution of a merger agreement. MFS believes that the combined company will
be in a strong position to offer a broad range of services based on Internet
technologies.
In the U.S., the acceleration of central office interconnection arrangements and
the availability of unbundled local loops is expected to enable the Company to
offer a variety of higher speed local Internet access services based on ISDN
(Integrated Service Digital Network) technology and, in the future, on such
technologies as ADSL (Asymetric Digital Subscriber Loop). In addition, the
Company plans to significantly expand its existing "Internet Hotel" space (i.e.,
facilities space specifically created to allow Internet Service Providers, Web
Page Hosting Service Providers and others to collocate with and utilize the
network services of the Company).Internationally, the Company intends to pursue
a range of new initiatives similar to those planned for the U.S. as regulatory
reform and other factors allow, and to expand its "Internet Hotel" space and
international transport service in both Europe and Asia.
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MFS believes these initiatives together with UUNET's 255 U.S. and 288
international points of presence will uniquely position the combined company to
benefit from the rapid growth in demand for Internet-related services.
Financial Flexibility
Specific expenditures for the initiatives announced today are subject to the
Company's review of a number of factors including cost of any additional capital
required, technological developments and market conditions. In addition, each
initiative may be implemented in whole or in part, and independently of any
other initiative, ensuring that the Company retains maximum financial and
operating flexibility.
The Company anticipates that implementation of these initiatives will result in
an increase in annual capital expenditures of approximately $500 million which,
together with currently anticipated expenditures, is expected to bring total
capital expenditures to approximately $1 billion per year over the period of
implementation.
The Company will be making a presentation today to industry analysts and
investors regarding the Company's strategy including a presentation of the
Company's planned initiatives described in this announcement. The meeting will
be held at the Waldorf Astoria Hotel in New York City starting at 8:00 am
Eastern Daylight Time.
Uncertainties Relating to Forward Looking Statements
This press release contains forward looking statements that involve risks and
uncertainties, including risk of changing market conditions, competitive and
regulatory risk associated with the telecommunications and Internet industries,
and other risks detailed from time to time in the SEC annual reports filed by
MFS, including the report on Form 10-K filed by MFS for the year ending December
31, 1995. Actual results, events and performance may differ materially.
MFS is a leading provider of communication services for business and government.
Through its operating company subsidiaries, MFS provides one-stop shopping for
integrated local and long distance services as well as a wide range of high
quality voice, data and other enhanced services and systems specifically
designed to meet the requirements of business and government customers. MFS'
common stock is traded on the Nasdaq National Market under the symbol MFST. MFS
is headquartered in Omaha, Nebraska.
