With MCI Deal, Verizon Will Acquire Huge Hosting Operation

In another telecom merger with a huge hosting component, Verizon will acquire MCI for $6.7 billion, the two companies said today. As with last month's SBC-AT&T deal, the early headlines focus on consumer and business telecom issues and MCI's 15 million voice customers. But Verizon will also acquire the world's ninth-largest web hosting operation, as MCI houses 878K hostnames - more than hosting specialists The Planet, Interland or SAVVIS.

That huge hosting business isn't entirely a holdover from the dot-com days, either. In the last year MCI has added 213K hostnames for 33 percent growth. Only eight other companies have added more hostnames during the same period, with MCI's hosting growth outpacing that of Yahoo, Hostway and Tect AG, among others. The former WorldCom has added more than 61K hostnames in the past two months alone.

MCI's hosting clients include marquee names like The Weather Channel and Bloomberg, as well as the U.S. government's Defense Nuclear Facilities Safety Board, which safeguards America's nuclear weapons arsenal.

MCI has substantial hosting capacity, as WorldCom built a huge network of more than 100 data centers during the dot-com boom, including more than 20 premium data centers spanning 100,000 square feet. Three of those centers were sold in bankrupcty auctions in 2003, raising $87 million to help repay creditors. The company, which had more than $103 billion in assets when it filed Chapter 11, emerged from bankruptcy last year with about $5 billion in debt and more than $6 billion in cash.

Verizon currently has a minimal hosting operation, with just 10K web-visible hostnames.