To boost its cash position, WorldCom Inc. is exiting the wireless resale business.
WorldCom has been in the wireless resale business for more than five years. The company got into the business with the goal of becoming a facilities-based wireless carrier — a goal that was never realized.
As of late, the telecom company has been plagued by a slowdown in consumer spending, a lagging long-distance market and questions from the Securities and Exchange Commission about some of its accounting practices. Ratings firms Standard and Poor's and Moody's Investors Service recently downgraded WorldCom's rating to below investment grade.
The company says the wireless resale business was unprofitable, and blames intense pricing pressure and acquisition cash requirements.
The process of exiting the business is expected to take several months to complete. Although no specific names were released, WorldCom says it has received interest from "several major facilities-based carriers" about purchasing the business. Some of WorldCom's wireless unit 2,200 employees will be let go.
The company also is rumored to be planning another round of job cuts which could send 20 percent of its work force packing, according to circulating media reports. WorldCom has confirmed that it plans to pare its employee roster to align costs with revenue, but the communications company is not releasing how many workers will be affected.
In May, WorldCom secured $1.5 billion in funding and announced plans to nix its MCI Group tracking stock on July 12. The MCI group stock back into the WCOM stock.