WorldCom eyes shake-up?
|
|
June 28, 2000: 6:41 a.m. ET
Report: US merger veto may prompt telecom giant to quit long-distance
|
LONDON (CNNfn) - U.S.-based WorldCom Inc. may seek to get out of the long-distance telephone business in the wake of a Justice Department lawsuit to block the telecom company's $129 billion buyout of Sprint Corp., according to a news report Wednesday.
Such a possibility, which would pare off a business that is the top rival to U.S. long-distance leader AT&T Corp., emerged in talks with the officials as one possible outcome of a regulatory veto of the merger, the Wall Street Journal reported, quoting people familiar with the negotiations.
German powerhouse Deutsche Telekom, which has been unabashed about its plan to enter the U.S. market, could be a potential bidder for WorldCom's long-distance assets as well as any of a handful of regional U.S. Bell operators. Analysts have also said Sprint's assets might become acquisition targets for other companies if the deal with WorldCom collapses altogether.
WorldCom had argued that it needed a deal with Sprint to add a mobile-phone business to its leading positions in Internet networks and long-distance services.
Stiff competition in the U.S. long-distance business has led to a big drop in profit margins in the sector. WorldCom's long-distance unit is its slowest-growing. Over the past few years, prices for long-distance services in the United States have dwindled to mere pennies a minute, with part of that cost going toward the payment of government fees.
Getting out of long-distance consumer telecom services would let WorldCom, which bought the business in its $37 billion purchase of MCI in 1997, focus on its faster-growing data, Internet and international sales businesses.
The paper said it was unclear how such a deal would be structured, but the company could dispose of its MCI-brand business servicing consumers, while keeping the telecommunications network -- effectively allowing WorldCom to operate as a wholesaler of long-distance transmission services to other telecom companies.
|
|
|
|
Sprint
WorldCom
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
|
|