There are several ways one can read the Pentagon mini-mobile-phone Iraq contract with MCI, formerly MCI before reputation-ravaged WorldCom Inc. figured a retro name change was in order since just about everything having to do with the one-time telecom giant had been turned upside down and inside out as a result of suspected WorldClass accounting fraud. Overstating $9 billion in profits can really screw things up.
Things are different now. Didn’t you know? Why, MCI CEO Michael Capellas has top executives signing an ethics pledge. And now, a reported $45 million mobile-phone contract in Iraq. Wow! The Street has to be thrilled things are finally turning around for its one-time daring darling, MCI/WorldCom. Disgraced Smith Barney telecom analyst Jack Grubman is feeling rich and vindicated.
But wait. MCI/WorldCom isn’t out of the woods. What’s this about Verizon, the nation’s top landline and wireless carrier, wanting to liquidate MCI as if it were the wicked witch of the west? Ah, how efficient and convenient. And those ambitious state attorneys general They too apparently are jumping on the bandwagon. How do the AGs find the time, what with all crackdowns on wireless carriers, spammers, Internet auction imitators and the rest?
And then there’s Maine. It recently filed suit against WorldCom bond underwriters in connection with the alleged loss of $38 million from the state pension plan. Maine is said to be represented by San Diego’s Milberg, Weiss, a law firm with some experience in dragon slaying. It gets worse. MCI just lost the multimillion-dollar March-of-Dimes telecom contract to Sprint Corp.
As you know, MCI is getting out of a wireless business it really never was seriously in to begin with. Still, MCI has a long and honorable tradition working with the federal government.
All in all, the MCI-Pentagon wireless deal was a brilliant stroke. Karl Rove never ceases to amaze. Why get in the middle of a domestic feud that undoubtedly would offend one American company or another? Why risk appearing to side with Motorola Inc. or Qualcomm Inc. when you can partner MCI and L. M. Ericsson instead?
Where’s Interwave Communications Inc. in all this? Hard to say, mainly because Interwave isn’t saying. What we do know is the firm wants to establish a beachhead in Baghdad. How clever.
But wait. What about the political implications? In teaming up with MCI/WorldCom, what signal is the Bush administration sending to Iraq? It’s true President Bush wants to export democracy to Iraq and the Middle East. But is MCI/WorldCom the face of America the White House really wants to market in the region? Indeed, will this not only fuel skepticism about American intentions in post-war Iraq? It all has an Alice-in-Wonderland feel, and gives new meaning to shock and awe.
