Terms of the Merger - Definitive merger agreement - $51 WorldCom stock to MCI shareholders - BT class A receives $51 cash - Collar of $29 to $41 - $37 B transaction - Purchase method of accounting - Approximately 20% accretive in 1999 4 Introduction
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EXHIBIT 99.3
Analyst Presentation
[MCI logo] [WorldCom logo]
2
Introduction
Xxxxxxx X. Xxxxxx
President and
Chief Executive Officer
3
Introduction
Terms of the Merger
- Definitive merger agreement
- $51 WorldCom stock to MCI shareholders
- BT class A receives $51 cash
- Collar of $29 to $41
- $37 B transaction
- Purchase method of accounting
- Approximately 20% accretive in 1999
4
Introduction
Pricing Structure
The Agreement
incorporates a fixed price of $51
within a band of prices for
[ Graph ] WorldCom of $29 to $41 and a
floating price outside the band.
5
Introduction
Logic of Purchase Accounting Offer and
Cash Paid to Class A Holder
- Removes overhang risk on WorldCom stock
- Improves accretion within purchase accounting
- Preserves economic flexibility
- Minimizes number of shares issued
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Shareholders
Merger With MCI Compelling Benefits of
Merger for Shareholders
- Immediately adds value for shareholders
- Accretive from Day One
- Leverages WorldCom's substantial investments in local business market
- Generates significant synergies
- Enhances potential for greater stock price performance
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Synergies
Synergy Benefits Are Higher and More
Certain (Estimates)
Timing Previous Revised
1999 $2,350M $2,500M+
Five Year $15,000M+ $20,000M+
Cumulative Synergies
New data and analysis shows larger, more certain synergies
Presentation contains forward-looking statements.
Actual results may vary.
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BT/Concert
Relationship with British Telecom
- Concert relationship with XXX continues
[ BT Logo ] - Exclusivity arrangement is
discontinued after close
- MCI WorldCom will continue to
benefit from international
assets of Concert
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International Strategy
International Strategy
- Facilities based, end-to-end managed services
- Local access networks in key financial
centers
- Long distance facilities where demand is
strong
- Cross border infrastructure (Gemini/Xxxxxxx)
- Focused on broadband requirements
- Frame Relay/ATM
- Internet backbone
- Integrated, full service communications service
provider to business sector
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International Strategy
Currently in 27 Cities in 13 Countries
in Europe/Asia
- Significant market share in UK and Germany
- Infrastructure-based in 6 countries
- International licenses in 5 countries outside U.S.
- Operational in Hong Kong/Tokyo
- Building the long haul networks
- Growing at approx 100% per annum
- Premier Internet Service Provider in Europe
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International Strategy
A Leading Provider of Transatlantic Capacity
- Currently owner on all major submarine cables
- Building the Gemini System
- 30 gigabits
- Ready for service in 6 months
- Integrated marine and land based network
- London to New York
- Designed for Internet/data
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INTERNATIONAL STRATEGY
Xxxxxxx Cable system
- Leeds - Helsinki
- Manchester - Copenhagen
- Liverpool - Hamburg
- Birmingham - Berlin
- Bristol - Hanover
- London - Dusseldorf
- Nottingham - Nuremberg
- Calais - Frankfurt
- Paris - Munich
- Bordeaux - Stuttgart
- Lyon - Geneva
- Marseille - Zurich
- Madrid - Torino
- Barcelona - Milano
- Brussels - Amsterdam
- Oslo
- Stockholm
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Xxxx X. Xxxxxxx
Chairman
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Opportunity
Combination Creates a New Kind of Company
- Best choice for shareholders, customers and employees
- Ideal combination of assets
- Growth company pursuing best opportunities in long distance, local,
data/internet and IT
- Pro-competitive
- First class team
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Opportunity
Combination Creates a New Kind of
Communications Company
- More agile than competitors
- Greater scale and global reach
- Entrepreneurial culture
- Strong opportunity for growth
- Exciting future for employees
- Workforce experienced in competitive marketplace
- Advanced portfolio of product offerings
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Network Highlights
Network Statistics (Approximate)
Xxxxxx
WorldCom MCI Fiber Combined
-------- --- ----- --------
Domestic Cities 62 34 45 100
(Fiber Networks)
Local Route Miles 4,000 3,000 2,000 9,000
Long Distance Route Miles 20,000 25,000 -- 45,000
International Route Miles 5,000 -- -- 5,000
Local Switches 42 24 22 88
Employees 15,000 55,000 1,600 71,600
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Network Highlights
Impact on U.S. Network
- Substantially increases reach and capacity
- MCImetro and Xxxxxx Fiber will
accelerate local city network
deployment in secondary
markets by one to two years
- More than doubles domestic
fiber system route miles from
20,000 miles to 45,000 miles
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NETWORK HIGHLIGHTS
Combined Local Networks
(WorldCom/MCI/Xxxxxx)
[Map of U.S. cities in Operation or Development
for Combined Local Networks of
WorldCom/MCI/Xxxxxx]
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Network Highlights
Owning the Right Networks (Combined)
Long Distance (Domestic)
- 45,000 route miles
- OC-48 and OC-192 plus Wave Division Multiplexing
Local Access (MFS/MCI/Xxxxxx Xxxxx)
- 100 domestic local city networks
- 70% of U.S. business market
Internet (UUNET/MCI/CNS/ANS)
- OC-12 backbone
- Significant increase in capacity
International (Gemini/Xxxxxxx)
- Build/Expand 35 networks in key financial cities
- Build pan-European network and trans-Atlantic cable
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Product Highlights
Combination Increases Value-Added
Products and Services
- Adds leading information technology and
systems integration platform
[ WorldCom and - Enhances scale and range of Internet
offerings and MCI Logo]
- Added to CompuServe Intranet/Extranet
expertise
- Enhances full service bundled offerings
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Product Highlights
Combined Value-Added Products and
Services Portfolio
Data Networking Telecommunication Service
- Public Internet - Long Distance
- Network and Systems - Local
Integration Services
- Wireless
- Intranets and VPN
- International
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Financial Highlights
Xxxxx X. Xxxxxxxx Chief Financial
Officer
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Financial Highlights
We continue to remain on track with the
current business plan.
Pending mergers only enhance results
going forward.
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Financial Highlights
Combination Strengthens Position as
World Class Competitor
- 1998 Proforma revenues more than $30 B
[ Graph ] - 1998 Proforma EBITDA more than $7 B
- Approximately 20% accretive to
WorldCom's EPS under purchase
accounting
Presentation contains forward-looking statements.
Actual results may vary.
25
Financial Highlights
Operating Cost Savings
Anticipated Annual Savings
($ in billions)
1999 2002
--------------------- ---------------------
Previous Revised Previous Revised
-------- ------- -------- -------
Core SG&A $1.0 $1.0 $1.3 $1.3
MCI Local Savings $0.7 $0.5 $1.5 $1.2
Domestic Line Costs $0.6 $0.6 $1.3 $1.8
International Line Costs $0.1 $0.4 $0.3 $1.3
---- ---- ---- ----
Total $2.4 $2.5 $4.4 $5.6
---- ---- ---- ----
Presentation contains forward-looking statements.
Actual results may vary.
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Financial Highlights
Capital Expenditure Savings
Anticipated Annual Savings
($ in billions)
1999 2002
--------------------- ---------------------
Previous Revised Previous Revised
-------- ------- -------- -------
X.X./Int'l/Internet $0.8 $0.9 $1.2 $1.3
Local $0.7 $0.7 $0.3 $0.3
IT -- $0.4 -- $0.4
-- ---- -- ----
Total $1.5 $2.0 $1.5 $2.0
---- ---- ---- ----
Presentation contains forward-looking statements.
Actual results may vary.
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Financial Highlights
Synergies Are Higher and More Certain
- Overall estimates higher than earlier estimates
-- Core SG&A savings . . . . . . .flat
-- MCI local savings . . . . .reduced
-- Line cost savings . . . . increased
-- Capex savings . . . . . . increased
- Potential to achieve benefits sooner
- Revenue benefits explored
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Financial Highlights
Cost Synergies Remain Reasonable
Pre-tax Cash Operating Cost Synergies
($ in millions - Excludes potential revenue
synergies)
Fiscal Year Ended December 31,
1999 2000 2001 2002
---------------------------------------------------------
Previous $2,350 $2,964 $3,770 $4,444
Revised $2,505 $3,567 $4,609 $5,596
As a % of combined 8%-10% 11%-12%
operating expenses
In addition: Reduced capex lowers depreciation
Reduced cash cost lowers interest expense
Presentation contains forward-looking statements.
Actual result may vary.
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Financial Highlights
Non Cash Earnings Benefits (Purchase
Accounting)
- Purchase Accounting fair market valuation
- R&D "write-down"
Combined impact reduces annual
depreciation and amortization by $360
million after tax
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Financial Highlights
Purchase Accounting EPS Impact
(Price $51.00)
EPS Accretion 1999
------------------
MCI
WorldCom No Revenue With Revenue % Ownership
Price Synergies Synergies of WorldCom
----- --------- --------- -----------
$41.00 27% 33% 41%
$36.00 20% 25% 44%
$29.00 9% 13% 50%
Presentation contains forward-looking statements.
Actual results may vary.
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Financial Highlights
Potential Impact of Revenue Synergies
1999
($ in billions)
---------------
Revenue $1.00
EBITDA $0.25
Over the next five years, revenue synergies potentially increase revenue growth
rate by 1.5 to 2.0%
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Financial Highlights
Revenue Synergy Benefits
- Combined MCI WorldCom Networks
- Long distance
- Local
- Internet
- International
- Enhanced revenue per customer
- Market MCI's extensive product offerings to combined customer
base
- Improved customer retention from greater product bundling
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Financial Highlights
Roadmap to Completing Merger
Timing
------
- MCI and WorldCom shareholders approve merger Q2/98
- WorldCom receives regulatory clearances Q2/98
Presentation contains forward-looking statements.
Actual results may vary.
34
Financial Highlights
Conclusion
More Value and Opportunity
- Higher value today and in the future
- Larger ownership in faster growth company
Superior Stock
- Superior shareholder return history
- 53% annual return to investors (1989-1996)
Greater Identifiable Synergies
- Reasonable at 8 - 12% of operating expenses
Track Record of Performance
- Operating and financial
- Delivering synergies
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[WorldCom logo]
[MCI logo]
