WORLDCOM: QUIET CONQUEROR

By John Greenwald

The biggest winner in the AOL-Compuserve deal may be WorldCom, the $4.5 billion phone company you probably never heard of, run by a cigar-chomping ex-basketball coach who isn't burdened by too much knowledge about the industry and his hard-wired, guitar-playing sidekick, who is. The whole operation is run out of a town that is not exactly known as a global telecommunications center: Jackson, Miss.

WorldCom is now the country's fourth largest long-distance company--but it's a three-horse race. So instead of fighting for retail customers with AT&T, MCI and Sprint, WorldCom is creating something akin to its own private global telecommunications network. It has made 40 acquisitions in the past five years, including one that netted UUNet, the world's largest provider of high-speed hookups to the Internet. That's why WorldCom agreed to pay $1.2 billion for CompuServe and then traded that company's consumer subscribers to AOL in exchange for ANS, AOL's own networking and Internet-access division. "What they're trying to do is just incredible," says Steve Koppman, a senior analyst for Northern Business Information, a market-research group. "WorldCom is the communications company of the future."

CEO Bernard Ebbers, a former high school basketball coach, helped found WorldCom in 1983 to sell long-distance service. He has since put up numbers worthy of company pitchman Michael Jordan. Anyone who invested $100 in WorldCom stock when the company went public in 1989 would have a holding worth $2,400 today. No telecom company has done better. WorldCom has rung up that performance by connecting an astonishing range of deals. The largest was last year's $12.5 billion acquisition of MFS Communications, a local phone company that had just acquired UUNet. Yet WorldCom remains a little-known empire that serves mainly corporate clients. "Frankly, a lot of their own customers still don't know a lot about them," says Jeffrey Kagan of Kagan Telecom Associates in Marietta, Ga.

They don't have to. By gathering all that Net capacity, WorldCom is building a low-cost back road that can deliver E-mail and other data among corporate clients from Boston to Hong Kong. The company recently launched an Internet fax service in a bid for a chunk of the $92 billion fax market. "If you find a way to fax over the Internet, you are going to take a huge piece of what is pretty much the growth segment of the [phone] industry," says the frenetic John Sidgmore, vice chairman of WorldCom and CEO of UUNet.

Ebbers, 56, will take Sidgmore's word on that. Ebbers is as low frequency as any telecom executive can be. He favors faded blue jeans and golf shirts and on-the-road Willie Nelson tunes. While his 1.8% stake in WorldCom is worth more than $560 million, he likes to aw-shucks his own role in his company. "The thing that has helped me personally," he says, "is that I don't understand a lot of what goes on in this industry." So he relies on executives who come along with acquired companies.

The most notable has been Sidgmore, 46, a weekend rock guitarist who masterminded last week's AOL deal. Sidgmore worked out the three-way swap with AOL chairman Steve Case at a breakfast meeting in July. Voila! WorldCom now controls the networking divisions of CompuServe, AOL and the Microsoft Network, which was already in the fold. Yet neither Sidgmore nor Ebbers plans to stop adding to their empire anytime soon. Asked whether WorldCom will continue its voraciously acquisitive ways, Ebbers responds with typical bluntness, "Are we alive?"

--By John Greenwald. Reported by Dee Gill/Jackson

With reporting by DEE GILL/JACKSON