3. Nature of Application

Applicants request approval for VarTec, through its wholly owned subsidiary VarTec Holding, to acquire control of Excel Communications Inc., which owns Excel, eMeritus, and LDWC. Applicants executed a Stock Purchase Agreement dated August 26, 2001 through which VarTec Holding has agreed to acquire from Teleglobe Holdings all of the authorized capital stock of Excel Communications Inc. Essentially, the transaction will result in a change in the ultimate parent of Excel, eMeritus, and LDWC, which will become wholly owned subsidiaries of VarTec Holding. According to Applicants, the Stock Purchase Agreement sets a closing date for the transaction no later than June 30, 2002 and closing will not occur until after regulatory approvals have been obtained.

Applicants state that following the merger, Excel, eMeritus, and LDWC will continue to provide service to their current California customers under the same corporate names and existing service arrangements, and pursuant to their existing California tariffs. Applicants maintain that the transfer of control will be transparent to all current customers of Excel, eMeritus, and LDWC and therefore will not be detrimental to the public interest. Further, the Applicants maintain that the transaction will serve the public interest by combining the financial resources and complementary operating, technical, and managerial strengths and experience of VarTec, Excel, eMeritus, and LDWC. According to Applicants, the transaction will enable VarTec, due to its strong financial position, to fully support the operation of Excel, eMeritus, and LDWC.

The application includes a description of the management teams of VarTec, Excel, eMeritus, and LDWC. The proposed key management has extensive experience and expertise in telecommunications. The application also includes a copy of the executed Stock Purchase Agreement, and VarTec's relevant financial information.