In the late 1950s, Bernard (Bernie) Ebbers liked nothing better than cruising the streets of Edmonton in his red Pontiac. On Saturday nights, he and his friends from Victoria Composite High School would gather at the Kingsway Inn to discuss their favorite topics - girls and sports - over beer. But when Ebbers, who now runs one of the world's fastest-growing telecommunications firms, took to the city's playing fields and gymnasiums, friendships instantly vanished. As an athlete he was so aggressive that opposition players and even his own teammates usually stayed out of his way. "He was always the dominant male," recalls Tony Fisher, a retired math teacher who used to play baseball with Ebbers. "If someone was in his way, he would run them over."
Ebbers is still running over people - but now his competitive instincts are trained on the corporate playing fields. On Oct.1, his Jackson, Miss.-based WorldCom Inc. launched the largest - and perhaps the most brazen - corporate takeover attempt in history. Ebbers has offered $41 billion for MCI Communications Corp. of New York City - a company four times the size of WorldCom and the second-largest U.S. long-distance company, after AT&T. His bid swept aside an earlier offer from British Telecom PLC, which owns 20 per cent of MCI and was on the verge of completing a $29-billion takeover of the company when Ebbers entered the game. After a board meeting last week, MCI agreed to consider the offer. Analysts expect British Telecom will increase its holdings in MCI in return for dropping out of the fight. "Common sense is going to prevail," said telecommunications consultant Eamon Hoey. "Ebbers may not get everything he wants, but there will be a negotiated settlement."
Ebbers, 56, is an unlikely telecommunications titan. The second oldest of three brothers and a sister raised in a modest east Edmonton stucco house, he excelled in several sports but was most passionate about basketball. In his 1959 high-school yearbook, the six-foot, four-inch teenager said his ambition was "to achieve a degree in commerce from the University of Alberta." As it turned out, a friend's failed romance got in the way. David Prins, a childhood chum, says that he and Ebbers had a friend who wanted to leave Edmonton to get away from a former girlfriend. All three boys applied to Mississippi College, where Ebbers won a basketball scholarship. "He never studied much," recalls Prins. "He didn't have to, he was that smart."
Ebbers stayed in Mississippi after earning a bachelor's degree in physical education. He found work as a high-school basketball coach but soon left to oversee a garment warehouse. In 1974, he scraped up enough money to buy a motel and restaurant in Colonel, Miss. Within a few years, he had assembled a string of nine Best Western motels.
The turning point came in 1983, when Ebbers met a group of investors at a diner in Hattiesburg, Miss. A year earlier, the U.S. long-distance market had opened to competition, so he and his partners decided to launch a company that would sell discount long-distance services. Ebbers has never looked back. Rather than expanding one customer at a time, he has taken over at least 40 similar operations. Ebbers himself owns 1.8 per cent of the company, worth $940 million.
The MCI takeover will transform WorldCom into more than just the second-largest U.S. long-distance carrier. In addition to its telephone services, MCI operates a vast optical fibre network that handles Internet traffic. Combining that system with its own data networks, WorldCom will control 60 per cent of all U.S. lines handling Internet data. Last year, WorldCom generated $1.4 billion in revenue from Internet traffic, a sector expected to grow to $40 billion in the United States by the year 2000.
Yet the MCI bid is still a gamble for shareholders. Ebbers has financed all his takeovers to date with WorldCom shares. To pay for MCI, he would have to print an additional 800 million shares. David Goodtree, an analyst at Forrester Research Inc., expects Ebbers to recoup some of the cost of the takeover by selling divisions that do not fit his plans. The merged company could also save about $3.5 billion a year by eliminating duplication and cutting staff. "So far, he has been very adroit at amassing assets that he wants to keep and discarding the rest," Goodtree says.
Ebbers still keeps in close touch with friends and relatives in Edmonton, and on a recent business trip gave a group of them a flight in his private jet. When not at WorldCom's headquarters near Mississippi College, he can often be found on horseback at his cattle ranch just outside the city, where he lives with his wife and three children. His success doesn't surprise his old friend Peter Elzinga, a former deputy premier of Alberta and federal MP. "Bernie is a very dedicated, aggressive individual," said Elzinga. The executives at MCI know all about that.
Maclean's October 20, 1997