Merger Update: Sprint bids goodbye to Global One

Sprint is all but abandoning its international strategy as part of its proposed merger today with MCI WorldCom and will quit Global One, its own international voice and data services affiliate, even before the merger closes.

Sprint is all but abandoning its international strategy as part of its proposed merger today with MCI WorldCom.

At the first joint press conference held by the chief executive officers, Sprint chief William Esrey said his company would be transitioning away from Global One, its own international voice and data services affiliate, even before the merger with MCI WorldCom closed.

Instead, Sprint will concentrate on using capacity and services offered by MCI WorldCom internationally via a network that MCI WorldCom itself is building around the world. Global One has been long criticised for not owning local facilities and having limited international intercity capacity, though in the last year it has attempted belatedly to catch up with new, dedicated ATM and IP networks from Nortel Networks and Cisco, respectively.

Global One customers will remain with the network under their current contracts. But Esrey says that one of Global One's three parents -- the other two are Deutsche Telekom and France Telecom -- will probably buy Global One outright. Esrey left little doubt that Sprint wouldn't be the one to take it over.

In other highlights of the press conference that formally announced the $US115 billion merger:

MCI WorldCom will begin immediately offering Sprint PCS service under the MCI WorldCom brand. MCI WorldCom has long coveted a nationwide wireless network to call its own.

The combined company will try to build a fixed wireless network to connect customers over broadband facilities even if they are located too far from central offices to take advantage of digital subscriber line. MCI WorldCom CEO Bernard Ebbers extolled the merger as taking place just at the time when wireless data applications are finally coming into the mainstream.

Sprint's Integrated On-Demand Network -- an ATM-based integrated-access service that has been slow to roll out -- got a few mentions from the two CEOs. But they emphasised to a greater extent the promise of MCI WorldCom's On-Net strategy, which connects users' facilities from end-to-end, including the local loop on both sides. ION has been slowed by Sprint's failure to build its own local access lines in big cities, and Esrey continued to talk about ION in the future tense though, he says it "sets a standard" for next-generation services.

Ebbers dismissed concerns over an initially cautious reaction from Federal Communications Commission Chairman William Kennard, who has previously warned about any more mergers among the top long-distance companies. "We understood from day one that it was up to us to show that this is a pro-competitive merger," Ebbers says. "The chairman (Kennard) told us he would keep an open mind."

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