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MCI May Be in Talks With Wireless Cable Provider

May 14, 1999|ELIZABETH DOUGLASS | TIMES STAFF WRITER

MCI WorldCom is in talks to buy wireless cable provider PrimeOne in a deal worth about $300 million, a move that would help the No. 2 long-distance phone company secure a path to homes and businesses where its wires don't reach, according to a source close to the situation.

Wireless cable operators use antennas to send video signals to subscribers using a technology called microwave multi-point distribution system, or MMDS, that has not been widely adopted. This technology could ultimately be used to deliver high-speed Internet access and phone services, analysts said.

In addition to several other wireless licenses, PrimeOne operates a wireless cable service in Los Angeles, Orange and Riverside counties. That system includes two large radio towers capable of serving more than 4 million homes.

The Southern California system has 65,000 subscribers to its PrimeOne TeleTV service, according to Mark Greenberg, president of Austin, Texas-based PrimeOne. The company's other wireless licenses and leases could serve much of San Diego and parts of San Francisco, Palm Springs and Seattle, although PrimeOne does not yet offer service in those areas.

Sources said privately held PrimeOne has signed a "standstill" agreement that prevents--for now--the possibility of a bidding war for the company.

PrimeOne bought its Southern California operation from Pacific Bell last fall after the phone company backed away from plans to enter the video business.

For Jackson, Miss.-based MCI WorldCom, the acquisition of PrimeOne would be its second purchase in the long-struggling wireless cable industry.

Last month, the phone company struck a definitive agreement to buy CAI Wireless Systems Inc. In addition, MCI has purchased large chunks of several other wireless cable firms' debt.

MCI, which does not own a wireless phone business, is particularly interested in breaking into U.S. neighborhoods and regions not served by fiber-optic lines.

MCI Worldcom shares rose $1.50 to close at $87.56 on Nasdaq.

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