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To: Dan B. who wrote (5489)	10/6/1999 12:43:00 AM
From: Darren DeNunzio	Respond to of 12823

MCI Worldcom To Buy Sprint For $115 Billion Full Coverage Telecom Industry News By Ian Simpson NEW YORK (Reuters) - MCI WorldCom Inc. (Nasdaq:WCOM - news), the No. 2 U.S. long-distance phone company, unveiled the biggest corporate takeover ever Tuesday, saying it would buy No. 3 carrier Sprint Corp. (NYSE:FON - news) for $115 billion in stock. In striking the deal, MCI WorldCom elbowed aside an 11th-hour rival bid for Sprint from BellSouth Corp. (NYSE:BLS - news), the regional phone company for the southeastern United States. The companies' agreement to merge also raised the concerns of a top federal regulator, who warned that it threatened recent competitive advances in the telecommunications industry. The combined company, to be named WorldCom, would have about 30 percent of the $90 billion U.S. long-distance market and create a huge rival to market leader AT&T Corp. (NYSE:T - news). The Sprint takeover also gives MCI WorldCom crucial presence in the fast-growing market for wireless voice and wireless data services. The merger ''creates nothing less than the most dynamic, most capable, most growth-oriented and most fully integrated communications company in the world, and I am not blushing when I say that,'' MCI WorldCom President and Chief Executive Bernie Ebbers told a news conference. Shares of Sprint closed down $1.13 to $58-7/8 on volume of 14.7 million shares, while MCI fell $3.69 to $67.94 on volume of about 58 million shares. The merger accord is the latest in a series of blockbuster marriages as telephone companies consolidate to battle in the global market and in new services such as the Internet and data transmission. The globe-straddling combined company, to be called WorldCom, will have more than $50 billion in annual revenues, 142,000 employees and more than 40 million business and residential customers. Clinton, Miss.-based MCI WorldCom will pay $76 in stock for each Sprint share. Also, each share of Sprint's wireless unit, Sprint PCS Group, will be swapped for one new WorldCom PCS tracking stock and 0.1547 share of MCI WorldCom common stock. The exchange of stocks is valued at about $115 billion. MCI WorldCom also will assume $14 billion in debt and preferred stock, bringing the overall value of the deal to $129 billion, the company said. At that price the deal dwarfs all others to date, including oil giant Exxon Corp.'s (NYSE:XON - news) planned $80 billion purchase of rival Mobil Corp. (NYSE:MOB - news). The jumbo deal came under swift criticism from William Kennard, the chairman of the Federal Communications Commission (FCC). The panel and the Justice Department have to approve the deal. ''The parties will bear a heavy burden to show how consumers will be better off,'' Kennard told reporters in Washington. However, Ebbers said he and Sprint Chairman and Chief Executive William Esrey were confident it would be approved. The merger also drew fire from the United States Telephone Association, a trade group representing local phone companies, as well as the Communications Workers of America and consumer advocates. SBC Communications Inc. (NYSE:SBC - news), whose $72 billion purchase of fellow Baby Bell phone company Ameritech Corp. (NYSE:AIT - news) is under regulatory examination, called for careful review of the MCI WorldCom-Sprint deal. Overseas, the merger would face scrutiny from the European Commission in Brussels. Analysts expect regulators will look at the combined strength of MCI WorldCom and Sprint in Internet backbones, the high-capacity long-distance fiber systems. Last year, European regulators conditioned WorldCom's $40 billion purchase of MCI on the sale of its Internet business. The Sprint deal is the latest of about 60 acquisitions orchestrated by Ebbers this decade as he built the company into one of the world's biggest telecommunications concerns. A year ago, Ebbers engineered WorldCom's $40 billion acquisition of MCI, wooing the company from an existing agreement to be bought out by British Telecommunications Plc. Analysts hailed the Sprint deal as filling MCI WorldCom's need for wireless services that can be packaged and sold with other features. Sprint's fast-growing wireless network offers service in markets with 180 million potential U.S. customers. When the merger is completed, expected in the second half of next year, Sprint's Esrey will become WorldCom chairman. Ebbers will become president and chief executive of the combined company. Bert Roberts Jr., the present MCI WorldCom chairman and former MCI chief, will remain on the board. The merger also is likely to cause a shakeup in the ownership of GlobalOne, Sprint's international telecoms service joint venture with Germany's Deutsche Telekom and France Telecom (NYSE:FTE - news). France Telecom said in a statement that the structure would have to change since GlobalOne competed with MCI WorldCom. Deutsche Telekom said it would sell its 10 percent stake in Sprint for about $9.2 billion. France Telecom also holds a 10 percent stake in Sprint. It said it did not plan to remain a shareholder. Standard & Poor's, a credit rating agency, said it might raise its rating on MCI WorldCom and Sprint debt. It cited cost savings and reduced capital expenditure, in part, for the move. Moody's Investors Service said it may raise Sprint's debt and affirmed MCI WorldCom's debt.

To: Dan B. who wrote (5489)	10/6/1999 12:50:00 AM
From: Darren DeNunzio	Respond to of 12823

Deutsche Telekom To Sell Sprint Stake Full Coverage Telecom Industry News By Melanie Cheary FRANKFURT, Germany (Reuters) - Deutsche Telekom AG (NYSE:DT - news) said Tuesday it will sell its stake in Sprint for a hefty profit and use the cash for acquisitions and partnerships after news MCI has concluded a deal to buy Sprint. Telekom said it plans no counter offer for U.S. telecoms giant Sprint Corp (NYSE:FON - news) and expects to sell its 10 percent stake for 21 billion marks ($11.5 billion), making a profit of 18 billion marks ($9.8 billion). A Telekom spokesman raised his initial 16.8 billion marks estimate of the proceeds from the Sprint sale, saying that earlier he had not had all the necessary documents. ''Telekom could make a massive profit,'' said BHF-Bank telecoms analyst Michael Schatzschneider, adding that Telekom could then look for another U.S. partner. MCI Worldcom announced earlier it would buy Sprint for $129 billion, including $14 billion in debt and preferred stock, making it the most expensive corporate takeover ever. Excluding debt and stock, MCI is paying $115 billion with Telekom's 10 percent stake worth $11.5 billion -- the value it itself puts on the holding. Analysts were not surprised by Telekom's willingness to pull out of Sprint and said the capital raised would pad a rather bare war chest and help Telekom back another American alliance. They said the group could only have lost by making a counter bid for Sprint. ''(Buying Sprint) would raise Telekom's bank debt and they are very proud that they have reduced their bank debt...They wouldn't have any alternative other than to sell it and they could get about 20 billion marks ($10 billion),'' said Merck Finck & Co telecoms analyst Theo Kitz. Duesseldorf-based WestLB telecoms analyst Holger Grawe said that Telekom would laugh all the way to the bank having only paid $1.5 billion, at the time, for its Sprint stake. France Telekom, which also holds 10 percent in Sprint, said it was mulling the sale of its stake, which could yield a capital gain of $7.5 billion. ANOTHER U.S PARTNER Analysts say a counter bid to MCI's offer by Telekom had been very unlikely because the small synergy benefits from acquiring Sprint would be insufficient to justify the cost. Telekom's disposable funds are rather reduced after its $11.5 billion purchase in August of British mobile phone operator One2One, which used up the capital the former state monopoly raised by floating a second tranche of shares. But to be the global telecoms player it aims to be, Telekom has to have a strong North American foothold. ''It is not an alternative to pull out of the U.S. You can't survive without a U.S. partner if you want to be a global telecoms group,'' Kitz said. Analysts urged Telekom to move a little faster if it wanted to stake its claim as a world player. ''Deutsche Telekom is just playing catch-up and that's the trouble. The pace of consolidation is moving so fast that each time they formulate a new strategy someone else has got there before they do,'' said John Tysoe, London-based telecoms analyst at WestLB Panmure. But analysts said the money raised from selling the Sprint stake would be insufficient for an adequate North American investment and Telekom would need to raise additional funds. This could be done by the German group floating its mobile phone and Internet divisions from which it could raise about $100 million, analysts say. Some analysts see Telekom eyeing Sprint's Internet business with the U.S. group expected to be forced to sell some of it due to regulatory reasons if its MCI takeover is to go ahead. One analyst, who declined to be named, said that Telekom is eyeing U.S. cellular phone group VoiceStream Wireless. Telekom shares barely reacted to news of the sale and at the close was 1.68 percent higher at 39.83 euros. GLOBAL ONE AND FRANCE TELEKOM But a question mark hangs over the money-losing Global One international joint venture between Sprint, Deutsche Telekom and France Telecom (NYSE:FTE - news). France Telecom and Deutsche Telekom each hold a quarter of Global One while Sprint owns 50 percent. A Deutsche Telekom spokesman said that a decision on Global One would only be taken once MCI's acquisition of Sprint was completed. Then all parties concerned would discuss and redefine their Global One interests, he said.