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

To: JDN who wrote (5246)	10/8/1999 7:40:00 PM
From: Anthony Wong	Read Replies (1) \| Respond to of 11568

Merger puts Sprint PCS on fast track herring.com:80/insider/1999/1008/inv-mci.html By Matthew A. DeBellis Redherring.com October 8, 1999 It looks like the biggest merger ever proposed will leave shareholders of Sprint (NYSE: FON) sitting pretty. If the $129 billion deal passes government muster, Sprint's wireless division, Sprint PCS (NYSE: PCS), quickly will give MCI Worldcom (Nasdaq: WCOM) a powerful national presence with an ability to leapfrog competitors. "[MCI Worldcom] ended up with the crown jewel of the industry," says Bryan Prohm, an analyst with market research firm Dataquest. Since Sprint created its PCS tracking stock a year ago, the wireless division's market performance has been stellar. After trading at its launch last November at about $18 a share, the stock hit a low of $15 a share on December 15, 1998, then screamed into $70 territory last month. Although Sprint PCS ranks sixth in wireless subscribers with 4 million, according to Dataquest, it's in prime position to climb over at least some of its competitors. In 1994, Sprint PCS and three cable provider partners together spent several billion dollars to build a digital, wireless network nationwide that now blankets 170 million people. Sprint eventually bought the interests of its cable partners, Cox Communications (NYSE: COX), Comcast (Nasdaq: CMCSK), and TCI, which now is a unit of AT&T (NYSE: T). Only two ventures cover more territory: the Vodafone Airtouch (NYSE: VOD)/Bell Atlantic (NYSE: BEL)/GTE (NYSE: GTE) wireless venture, formed last month, and Nextel (Nasdaq: NXTL). Vodafone boasts a coverage area encompassing 228 million people and 21 million subscribers. Nextel blankets 180 million people, including 3.6 million subscribers. If MCI Worldcom pumps up Sprint PCS even more, other wireless firms may be forced to merge or form partnerships in order to increase their national and local presence, Mr. Prohm says. HOLD THE PHONE During a press conference Tuesday announcing the deal, MCI Worldcom President and CEO Bernard Ebbers said the long-distance business had "lost its juice," but the wireless market promised growth. Still, the deal leaves PCS stockholders with a measure of uncertainty. The proposed merger calls for shareholders of both Sprint and Sprint PCS to swap shares with MCI Worldcom. However, Sprint shareholders are being given added assurance -- the deal specifies they'll receive $76 a share in MCI Worldcom stock as long as the stock trades between $62.15 and $80.85 when the deal closes. PCS shareholders received no such stipulation. For every PCS share, investors will get one share of a new MCI Worldcom PCS tracking stock at a price yet to be determined and .1547 shares of MCI Worldcom stock. "Why is it that the motivating force in this deal is wireless and we are getting the shorter end of the stick?" asks Cindy Motz, a vice president at Credit Suisse First Boston. MCI Worldcom wouldn't comment. ON THE WAY Either way, the stocks of all parties involved could experience short-term volatility as the megadeal winds its way through sticky regulatory procedures. Credit Suisse First Boston rates Sprint PCS stock a Buy. The investment firm estimates MCI Worldcom is paying $72 billion for Sprint and $57 billion for the PCS division. The deal is expected to close in the second half of next year.