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Qwest, MCI talks dismissed as possible bargaining tactic

NEW YORK -- MCI Corp. and Qwest Communications International Inc. are reportedly discussing the telephone industry's second big merger in days, though some observers dismiss the potential marriage as so flawed that the talks may be a ploy by MCI to lure another suitor, such as Verizon.

The companies, both recovering from financial scandals that have hobbled their businesses, did not comment on yesterday's report in The Wall Street Journal, which said a $6.3 billion takeover by Qwest is being discussed.

Like the $16 billion buyout of AT&T Corp. by SBC Communications Inc. disclosed Monday, an MCI-Qwest combination would pair one of the nation's big local phone companies with a struggling but still sizable long-distance carrier with an enviable base of corporate and consumer clients.

Beyond that similarity, however, industry observers see the strategic fit between AT&T and SBC as far superior, especially since several years of financial and legal woes at both MCI and Qwest have handicapped their abilities to compete for customers and invest in their network assets.

''This one is really strange and hard to think about as a combined company," said Muayyad Al-Chalabi, managing director of the consulting firm RHK.

MCI has been shopping itself around since the company emerged from bankruptcy last spring, its balance sheet cleaned of debt, its name changed from WorldCom, and its headquarters moved from Mississippi to Ashburn, Va.

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