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Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: zbyslaw owczarczyk who wrote (13520)	10/4/1999 1:20:00 AM
From: pat mudge	Read Replies (1) \| Respond to of 18016

Deutsche Telecom in the wings: <<< October 4, 1999 Business and Finance - Europe Deutsche Telekom to Debate On Whether to Bid for Sprint By WILLIAM BOSTON Staff Reporter of THE WALL STREET JOURNAL BONN -- Deutsche Telekom AG management is to meet Monday to discuss whether to bid for the 90% of Sprint Corp. that it doesn't already own, but company officials already doubt they can win a full-blown bidding war for the U.S. long-distance carrier with rival MCI WorldCom Inc. Deutsche Telekom won't bid for Sprint until the details of MCI WorldCom's offer have become public, say people familiar with the situation. And it is still far from certain that Deutsche Telekom will offer a counterbid. A source familiar with the matter said he doesn't expect MCI to make its offer public until later this week. Officials at Deutsche Telekom have been studying their options for some time and appear certain they won't be able to outbid MCI WorldCom. A Deutsche Telekom official said the company can't achieve the same cost savings possible for MCI WorldCom, which can post greater savings by combining its long-distance networks with Sprint's network and eliminating redundant expenses. "Where you don't have a lot of fit strategically, you don't have a lot of synergy and then cannot be as flexible on price," the Deutsche Telekom official said. Conflict With France Telecom Last year, Deutsche Telekom urged its partner France Telecom to jointly bid for Sprint, but people familiar with the situation say France Telecom objected and then blocked Deutsche Telekom from acting alone. Through a series of agreements with both France Telecom -- which also holds 10% of the U.S. carrier -- and Sprint, Deutsche Telekom considered its hands tied, neither able to bid for Sprint nor expand in the U.S. The alliance with France Telecom collapsed when Deutsche Telekom attempted to merge with Telecom Italia SpA. Rival Olivetti SpA eventually outbid Deutsche Telekom for Telecom Italia, but that did nothing to repair Deutsche Telekom's relationship with France Telecom. Deutsche Telekom officials now say the abrupt conflict with France Telecom was necessary to pave the way for a new international strategy. "We needed a big bang," said a Deutsche Telekom official. "I don't think it would be bad at all to be free of the emotional handcuffs, the legal handcuffs and the partnership handcuffs." Other Alternatives Are Possible Such statements reflect an attempt by Deutsche Telekom's senior management to dispel the view of some analysts that a successful takeover of Sprint by MCI WorldCom would leave the German phone company adrift without a secure anchor in the key U.S. telecommunications market. Deutsche Telekom officials say a clean slate in the U.S. would allow them to consider alternatives to a Sprint takeover. "The question is which way do we go if we don't go with Sprint in the U.S. market?" said a Deutsche Telekom official. The Deutsche Telekom officials decline to say whether an offer is planned for Qwest Communications International Inc., Level3 Communications Inc. or Global Crossing Ltd. What is clear is that Deutsche Telekom is through with alliances it can't control. Should MCI WorldCom take over Sprint, Deutsche Telekom is likely to go on a buying spree to find partners that match its priority areas: mobile communications, consumer Internet use and corporate-data services that include Internet-based communications. But Deutsche Telekom officials say it isn't likely that they will act immediately. They add that the company won't try to position itself in the U.S. market in one fell swoop. "It will be difficult for us to do it in just one step," said a Deutsche Telekom official. "We will require two or three steps." In a separate development, Deutsche Telekom named Karl-Gerhard Eick -- a 45-year-old, largely unknown German executive -- to succeed outgoing Chief Finance Officer Joachim Kroeske. Mr. Eick currently serves as finance chief at Franz Haniel & Cie GmbH and has a strong background in international acquisitions, including a 1996 hostile bid for Lloyds Chemists PLC by a Haniel unit, Gehe AG. Mr. Eick also helped Gehe assemble Europe's largest cross-border drug-distribution network through a chain of aggressive takeovers. Such experience could make him a valuable asset for Deutsche Telekom's chief executive officer, Ron Sommer. Mr. Kroeske, who has a tense relationship with Mr. Sommer, has said he plans to step down in March. But insiders at Deutsche Telekom expect Mr. Kroeske to make room for Mr. Eick sooner. >>>>>