MCI to Write Down Assets

MCI Inc., the second-largest U.S. long-distance telephone company, said Monday that it would write down its assets by $3.5 billion in the third quarter, reflecting their reduced value as calling prices tumble and demand declines.

MCI’s $10.9 billion of property, plant and equipment, and non-network assets will be sliced by a third. The value of MCI’s brand will be cut by $260 million and network assets will be reduced by about $3.25 billion, Ashburn, Va.-based MCI said.

Increasing competition and a U.S. decision to raise the price of offering local phone service reduced the value of the assets, MCI said. AT&T; Corp., the No. 1 seller of long-distance service, this month said it would slice the value of its assets by $11.4 billion because of the ruling. The two companies are retreating from the residential market.

Shares of MCI rose 1 cent to $16.19 on Nasdaq before the announcement. They had fallen 31% this year.

The write-down will reduce depreciation and amortization costs by about $220 million in the second half, MCI said.

A U.S. federal appeals court in March struck down regulations that enabled MCI, AT&T; and Sprint Corp., another long- distance operator, to rent the networks of local phone companies including Verizon Communications Inc. at below-market rates.

Sprint said last week that it would also write down its long- distance assets. The company said it would be more specific about the charge when it reported results today.