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Too profitable to sell?

Paging SkyTel

CLINTON — SkyTel is here to stay, at least for now.

After being on the chopping block during the tumultuous WorldCom implosion, MCI, which won court approval Oct. 31 to emerge from bankruptcy protection instead of being liquidated, has decided that SkyTel will remain in the company portfolio and has already moved most of its Jackson-area employees to the Clinton campus.

“We have more employees at the WorldCom site now than when WorldCom was headquartered here,” said Clinton Mayor Rosemary Aultman. “Of the 1,200 employees there now, about 550 of them are MCI employees and the rest are SkyTel employees. We’re very pleased because we now have a larger employee base than ever.”

Earlier this year, MCI informed Aultman that the company would increase the number of employees, mostly IT personnel, by 100 in 2004, bringing the total number of employees at the Clinton campus to 1,300. In January 2000, SkyTel had some 1,700 employees in the Jackson area.

If a rival paging firm had acquired the profitable wireless messaging business, many of SkyTel’s jobs would have been at risk for elimination or relocation.

“The WorldCom situation last year turned out to be a blip on the radar,” said Aultman.

MCI spokesperson Debbie Lewis confirmed “the company made a strategic decision to keep SkyTel.”

“The success and profitability of SkyTel, plus SkyTel’s focus on the business market, the Corporate 1000 and MCI’s synergy with that, was part of that decision,” she said.

When asked if there were offers to purchase SkyTel when it was on the market, Lewis declined to comment.

“That’s confidential,” she said. “SkyTel is a cash flow-positive business and it doesn’t make sense to sell it at bankruptcy prices. It’s got good customer retention and we’re forging into new markets successfully and serving our customers well.”

MCI, which Lewis claims employs 55,000 and serves 20 million customers, said the entire Jackson-area SkyTel team being under one roof “adds to the dynamic feeling.”

“We think the employees are excited about it,” she said.

Established in 1989 by John Palmer and Jai Bhagat, SkyTel had amassed 1.6 million customers through an aggressive marketing campaign and had partnered with eBay, eLink, DataLink, Big Planet, Bloomberg and Office Depot by the time WorldCom bought it for $1.8 billion in October 1999.

An industry pioneer, SkyTel had been the first wireless messaging company in the nation to offer alphanumeric paging, international paging, two-way and text-to-voice messaging. Via its subsidiary, SkyTel had also tapped into the Latin American market, where less than 1% of the population had pagers.

“SkyTel is not number one in size, but we arguably have the best service available,” said Lewis. “Our customers are 85% of the Fortune 1000. In our space, in terms of penetration of the corporate market, we could be considered number one.”

On September 15, when MCI filed its July 2003 monthly operating report with the Bankruptcy Court, the company reported $2.116 billion in revenue compared to $2.075 billion the month before. The company said revenue gains “were driven primarily by an increase in long distance volume, an additional business day, the inclusion of revenue from wireless messaging services that had previously been included in discontinued operations and certain non-recurring items.”

Some investment bankers criticized WorldCom, already the largest reseller of SkyTel paging services, for buying SkyTel four years ago. Many people perceived it as a poor fit, and SkyTel employees complained about the clash of company cultures. With the changing of the guard, that problem may have been alleviated.

“Stay tuned, because early next year there are some really exciting things we’re going to announce,” said Lewis. “SkyTel is going to be an innovator in the marketplace as part of MCI’s commitment to innovation and simplicity in the marketplace.”

Contact MBJ contributing writer Lynne W. Jeter at mbj@thewritingdesk.com.

About Lynne W. Jeter

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