MCI, the nation’s second largest-, and Sprint, the nation’s third largest-long-distance carrier, are talking about a merger that would result in a mega long distance company. Though, it’s not a done deal by a long shot.
Sprint is very attractive to MCI Worldcom because along with long distance, Sprint brings a wireless component to the deal. Combined, the company is valued at $73 billion – less than half of MCI’s valuation of $151 billion.
Reports indicate that the new financial structure would trade Sprint stock for a new WorldCom stock. This would allow MCI to keep Sprint’s wireless business separate from the long distance side. Apparently, the still-growing wireless business can wreak havoc on the financials.
Industry observers don’t think regulators will block a merger (combined the companies will represent 30 percent of the industry while AT&T has 60 percent of the marketshare); however, Sprint’s ongoing struggle with it’s Global One partners could. France Telecom SA and Deutsche Telekom AG both hold 10 percent of Sprint and that’s enough to undo the deal.