No. 14: Verizon-MCI combination packs a punch

The sale of MCI Inc. to Verizon Communications Inc. is a done deal, and the merger is progressing smoothly with the strengths and services of each company dovetailing nicely.The new Verizon, analysts said, is a match for AT&T Corp., newly merged with SBC Communications Inc. MCI federal veteran Jerry Edgerton is at the helm of Verizon Federal.While waiting out the General Services Administration's awards for Networx, its telecommuncations contract, Verizon has not been idle. It's on the Air Force's NetCents contract, it picked up more work with the National Security Agency, and it's teamed with Lockheed Martin Corp. on the Air Force's 10-year, $2 billion Transformational Satellite Communications System Mission Operations System.Verizon reported revenue of $19.3 billion for the fourth quarter of 2005, compared with $18.3 billion for 2004's fourth quarter. Revenue for 2005 was $75.1 billion, up 5.4 percent from 2004's $71.3 billion.Both rebounding state and local budgets and tightening federal budgets hold opportunities: bringing new capabilities to one and efficiencies to the other.It looks like Verizon, ranked No. 14 on the Top 100 with $994.4 million in prime IT contracts, is in the catbird seat."Well, I would never say the catbird seat," said Verizon Federal Group President Edgerton. "But we're pretty enthusiastic about what we've put together."Each of the two companies brings skills and experience that complements the other," he said. "MCI has global networking and IT architecture experience and a significant federal government customer base. Verizon has significant wireless local infrastructure and experience building infrastructure for state and local governments. The combination puts us in position to become the premier communications company in government."Verizon and AT&T are the only 500-pound gorillas in the U.S. market, said Brian Washburn, business network services analyst with Current Analysis Inc., Sterling, Va. "My impression is that there's a lot of low-hanging fruit just waiting for them."Verizon Business, the new division that includes Verizon Federal and also serves enterprise customers, in February released two new products that combine the companies' innovations: The Enterprise Mobility suite combines MCI's virtual private network technology and Verizon's broadband wireless network; and wireless broadband back-up services let enterprises use the network for business continuity."We're always increasing our speed, we've been pushing fiber to the premises, and we've made a significant investment in our networks to ensure they're fully compliant and leading in capabilities for Web-based and Web-enabled processes and the ability to obtain those services," he said. "Government is taking the lead in net-centric communications, and we believe we can take what we've learned and done in government communications and apply it in the private sector."Edgerton has the relaxed, cheerful air of a man who sees a goal: "To become the premier communications company in government," coming within his grasp."We have the technology, the reach, and now," he said, "because of Verizon, the financial power to achieve it."