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Telekom pockets $7.7B
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October 5, 1999: 12:36 p.m. ET
German firm will not launch counterbid for Sprint, opts to sell its 10% stake
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LONDON (CNNfn) - Deutsche Telekom has chosen to sell its 10 percent stake in Sprint and pocket a profit of some $7.7 billion, rather than trying to outbid MCI Worldcom's $129 billion offer.
"We will not be launching a counterbid and have instead decided to sell our stake," a spokesman for the Germany's largest telecom company confirmed to CNNfn.com. The stake will cost MCI Worldcom (WCOM) around $9.2 billion.
Telekom (FDTE), the world's No. 3 telecom firm, paid around $1.5 billion for its 10 percent stake in Sprint in 1996, when it formed a partnership with Sprint and France Telecom called Global One.
That partnership now lies in tatters, after Telekom decided to use the MCI Worldcom bid to dump its holding. France Telecom (PFTE), which also holds a 10 percent stake in Sprint (FON), still has not said what it will do with its holding. Some analysts, however, expect the French telecom operator to stick with the enlarged U.S. group.
Global One was already undermined after the relationship between France Telecom and Telekom deteriorated when the German company launched a white knight bid for Telecom Italia earlier this year.
The move almost derailed Wind, an existing cellular joint venture between the French and German firms in the Italian market.
Telekom's strategy backfired when Olivetti's hostile bid succeeded in capturing control of Olivetti. France Telecom was infuriated by its partner's move and relations have remained frosty.
While Telekom has reaffirmed its commitment to Wind, the exit from Sprint now means that the German company must find another U.S. partner.
Telekom's decision came a day after France Telecom moved into the German cellular phone market as it took a 17 percent stake in the country's third largest mobile phone operator.
Telekom shares closed 1.6 percent higher in Frankfurt, while France Telecom's stock shot up 3.7 percent in Paris.
-- from staff and wire reports
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