MCI Communications Corp's determination to become a major player in US local telephone markets despite deep financial sacrifices is disappointing but hardly surprising, analysts said.

In a statement, MCI said that it would forge ahead with the heavy investments it has been making in local phone markets, and as a result, earnings for the second half of 1997 and the next year would fall below expectations.

"They are making a strategic move," industry analyst Jeffrey Kagan said. "They are willing to bite the bullet for a little while," he said of the resulting financial impact.

Wall Street analysts said MCI's decision to trade off financial results in order to reach its strategic goal of entering Baby Bell-dominated US local phone markets fits with its previous brash moves to pry open monopoly markets.

In the early 1980s, MCI made huge investments on long-distance networks to prepare for the possible breakup of AT&T Corp, which occurred in 1984. That risky bet positioned MCI to become the nation's second-largest long-distance carrier.

"It's consistent with their history," said one brokerage analyst.

"The confusing thing is that MCI is not getting the local markets open quickly, yet they are going full speed ahead," said the analyst, who asked not to be named.

"If you think the delays are just for a few months or a year, the smart thing to do is to continue to invest," he said.

Other analysts declined to comment immediately after a conference call with the company late Thursday afternoon.

MCI stock fell 2-3/8 to 40 in after-hours trade.

MCI has built fiber-optic-based local phone networks in more than 21 cities and is committed to offering local service in at least 30 cities by year-end.

But the company has complained bitterly that its efforts have been severly hampered by "anti-competitive" practices of the Baby Bells, which dominate local services.

Among other factors, MCI said the failure of the regional Bells to reach deals to interconnect MCI's network with those in each Baby Bell region has prevented the company from realizing revenues from its more than $1 billion in local investments.

"They feel they are at a crossroads in terms of entry into the local services business," said Kagan, of Kagan Telecom Associates in Atlanta.

"They are not able to move into local services as quickly as they want and they blame (Baby Bell) hurdles."

"Their choice is to pull back or go ahead like they did in the early 1980s when they invested heavily in long-distance," he said.

"It's a typical bold move by MCI," Kagan said of MCI's willingness to put aside short-term financial considerations.

"They are not the kind of company that will throttle back."

MCI is in a pact to merge with British Telecommunications Plc. (Reuter)