GTE PUTS MCI AT TOP OF ITS WISH LIST; UNSOLICITED, ALL-CASH BID SET AT $28 BILLION.

Byline: Seth Schiesel The New York Times

Adding yet another combatant to the richest corporate takeover battle in American history, GTE Corp., the nation's third-largest local telephone company, made an unsolicited offer to acquire MCI Communications Corp., the nation's No. 2 long-distance carrier, for $28 billion.

GTE's all-cash bid came two weeks after WorldCom Inc., an upstart telecommunications provider, offered $30 billion in stock for MCI. That proposal was also unsolicited, and like GTE's offer is meant to overtake a previous agreement by MCI to be acquired by British Telecommunications PLC for about $19 billion in cash and stock.

MCI did not comment other than to say that its board, which already was studying WorldCom's offer, plans to meet again soon to weigh its options.

But no matter how MCI chooses to respond to these or any subsequent offers or counteroffers, the flock of suitors signifies the telecommunications industry's relentless imperative to consolidate.

Deregulation, the upsurge in wireless communications and the Internet's soaring popularity are now compelling companies of all sorts and sizes to reach out for partners that can help them offer every conceivable communications service under a single brand name.

``The key product strategy going forward for us is a bundled service - local, long-distance, data, international, wireless, paging,'' Charles Lee, GTE's chairman, said in an interview after announcing his company's offer for MCI on Wednesday afternoon. ``The ability to bundle is absolutely essential to our ability to succeed going forward.''

Companies able to assemble such a lineup of services seek not only the rewards of rich revenues but also the considerable cost savings that would come from operating full-service networks.

``We're going from customers taking multiple services from multiple vendors to taking multiple services from one vendor,'' said Eric Strumingher, an industry analyst at the investment house Paine Webber. ``The idea for the companies is to get in now while the getting's good and lock those customers in.''

The big communications industry takeover battles of the past - like the bidding war a few years ago in which Viacom prevailed over QVC Inc. to acquire Paramount - have focused on creative control of information and entertainment. But these days the big-ticket communications deals are for control of information pipelines.

Even though GTE's $40-a-share offer for MCI is slightly less than WorldCom's, Wall Street sees GTE's bid as credible because MCI's shareholders may prefer the security of GTE's cash to the uncertainty of accepting WorldCom stock, which has lost about 5 percent of its value over the past week.

Still, in a statement released Wednesday, WorldCom contended that it is the better suitor.

``Our $41.50 offer provides superior near-term and long-term value for MCI shareholders,'' the company said in a statement. ``WorldCom and MCI have more compatible cultures than GTE and share a common entrepreneurial spirit, enabling WorldCom-MCI to compete more effectively.''

Although a combined GTE-MCI would be a giant with annual revenue of about $40 billion, it still would be about 20 percent smaller than AT&T Corp., the nation's No. 1 long-distance telephone company, which had about $52 billion in sales last year.

A combined GTE-MCI, however, would be the first company since the court-enforced breakup of AT&T in 1984 to have a large presence in both the local and long-distance telephone markets.

GTE serves about 21 million local telephone customers scattered across 29 states, mainly in rural and suburban areas but including Honolulu, Los Angeles, and Tampa and St. Petersburg, Fla. MCI, meanwhile, controls about 20 percent of the $80 billion long-distance business.

Although the Telecommunications Act of 1996 allows a single company to offer both local and long-distance service, doing so requires a sign-off by the Federal Communications Commission. The sheer size and competitive clout of any MCI acquisition, moreover, makes a separate federal antitrust inquiry highly likely.

People close to FCC Chairman Reed Hundt said Wednesday that the commission would no doubt give careful study to a proposed GTE-MCI merger but that they would not expect outright opposition.

But one antitrust expert predicted harsher scrutiny by the Justice Department.

Philip Verveer, a lawyer at the firm of Wilkie, Farr & Gallagher, who argued the government's case against AT&T when he worked for the Justice Department, said a GTE-MCI merger would be ``harder than WorldCom, because GTE possesses these local monopolies that are very deeply entrenched.''

``This is conceptually the same as the analysis that led the Justice Department to seek the breakup of the old Bell system,'' Verveer said. ``The Justice Department will give this thing a very, very hard look.''

Although MCI is seen as a valuable prize, its three suitors concentrate on three separate types of customers. So depending on which company ultimately wins the affections of MCI's board and shareholders, a very different sort of telecommunications behemoth would be created.

MCI started down the road to acquisition late last year when it agreed to be acquired by British Telecom for about $24 billion. In an alliance that includes Telefonica of Spain, BT is assembling a global venture called Concert, concentrating on serving the large multinational corporations that are the most lucrative telecommunications clients.

But in August, BT, humbled by negative comments from British shareholders who thought it was paying too much for MCI, and spooked by MCI's mounting losses in its nascent local telephone operation, convinced MCI's board to grudgingly accept $5 billion less for the company.

In rode Bernard J. Ebbers, the blunt chairman of WorldCom Inc., a company he conceived in a Mississippi diner in the mid-1980s and built into a $7 billion corporation through more than 40 acquisitions.

On Oct. 1, Ebbers offered about $30 billion in stock for MCI, which he hopes will help WorldCom expand beyond its core constituency of small and medium-size American business customers for local, long-distance and Internet services.

GTE, in contrast, serves primarily a consumer clientele. But under Lee, who became chairman in 1992, the company has been offering those consumers more services, while moving into the business market.

GTE has won about 1 million long-distance customers, mostly from AT&T, since the passage of the Telecommunications Act of 1996. The law allowed GTE to offer long-distance service without the complex restrictions that had hampered its efforts as a long-distance carrier in the 1980s, when for a time it was a partner in the company that is now Sprint Corp.

CAPTION(S):

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BOX: GTE Corp. at a glance; MCI Communictions at a glance

Chart: GTE bids for MCI