WorldCom plans to drop its tainted name in favour of MCI as the bankrupt US carrier seeks to establish a new image with customers, The Wall Street Journal has reported.
Citing people familiar with the company, the newspaper said the company could change its name as early as next week, when WorldCom filed its reorganisation plan with the US Bankruptcy Court for the Southern District of New York.
"We're declining to comment on speculation," a WorldCom spokeswoman said.
Meanwhile, often-quoted telecommunications analyst, Jeff Kagan, said the name change would come as no big surprise. WorldCom acquired MCI Communications in 1998, and Kagan said the name change could help the company distance itself from a fraud scandal revealed in June.
"This was the most widely expected secret ever in the telecom industry," Kagan said. "After the shock and awe of their fraud and scandal, and after they filed for bankruptcy, and announced their intention to emerge, it's been almost a foregone conclusion that WorldCom would change it's name, and probably change it to MCI. It was never a question of IF to me, it was always a question of WHEN."
WorldCom needed to put the fraud issue behind it before going forward with a name change, Kagan said.
"If they are doing this, it may signal that the bad news is behind them and they can get on with the business of rebuilding," he said. "It's a good move. MCI still has a history and a magic with the public and will mean a lot to all the old MCI-ers who never quite felt comfortable with the change to WorldCom anyway."
MCI Communications was once a popular name to US businesses and consumers. The company introduced, among other things, the successful Friends & Family discount telephone scheme, which has since been copied by operators around the world.
WorldCom acquired MCI in 1998.
By changing its name, WorldCom hoped to distance itself from its still-mounting accounting fraud, which could total as much as $US11 billion, according to WSJ's sources. The MCI name enjoyed widespread recognition.
WorldCom rose from obscurity to Wall Street fame after capping a string of nearly 70 acquisitions, including MCI, but stumbled after regulators blocked its bid for Sprint. After that failed acquisition, it was pretty much downhill for the long-distance operator.
The revelation of fraud in June helped push WorldCom into the largest Chapter 11 bankruptcy court proceedings in US corporate history.