BellSouth Bids $72B At 11th Hour For Sprint

Welcome Guest. | Log In| Register | Membership Benefits

October 04, 1999 (8:32 AM EDT)

By Mary Mosquera,

BellSouth made a $72 billion cash and stock play for Sprint over the weekend, becoming the last regional local carrier to attempt to get on the merger bandwagon to establish an even larger presence.

But the eleventh-hour bid by the southeastern Bell, though higher than an earlier offer by MCI WorldCom, may be rejected, according to a report in Monday's Wall Street Journal. Sprint directors are meeting Monday and are expected to approve MCI WorldCom's $65 billion all stock deal because it would create a company with more scale to compete, the report said.

Either deal would present some problems for federal regulators. If No. 3 U.S. long distance company Sprint merges with the No. 2 provider, MCI WorldCom, forming a long distance behemoth to take on AT&T, Sprint's Internet business may have to be sold. If Sprint combines with the Atlanta-based local telecom, it would have to get rid of some of its wireless assets because one company cannot hold two licenses in one area. Moreover, BellSouth is blocked from offering long distance service in its nine-state region under the 1996 Telecommunications Act. So it would have to sell off Sprint's southeastern long distance assets or wait until that ban is lifted.

Sprint would be a good fit for either MCI WorldCom or BellSouth, said Atlanta-based telecom analyst Jeffrey Kagan.

"Sprint is one of the few national crown jewels still left on the table," Kagan said.

Sprint would provide MCI WorldCom a wireless link. And Sprint would transform BellSouth virtually overnight into a national player.

"The companies are willing to pay so much because of the future value Sprint brings to them, not just the present value," Kagan said.

But a merger with MCI WorldCom may meet opposition from France Telecom and Deutsche Telekom, who each hold 10 percent of Sprint and sit on its board, because of antitrust concerns in Europe. The foreign carriers are part of a joint venture with Sprint in Global One. MCI WorldCom has been building its own European network.

The German telecom has also considered buying Sprint, but may not be able to take on a bidding war with MCI WorldCom.