WASHINGTON-With a culture that has resulted in 65 mergers since 1985 with increasingly larger companies, Bernie Ebbers, the chief executive officer of MCI WorldCom Inc., does not believe he will have to divest his Internet backbone to acquire Sprint Corp.’s wireless properties.
“The wireless thing is not the only thing we wanted. It was a primary component. But, if we had to sell off the rest, the tax problem-from an accounting perspective-would be much more than we could live with. We don’t think that is a necessary consideration. We didn’t go into this thing blind. We did a very thorough analysis. Just imagine from Sprint’s point-of-view, if they had not felt very, very strongly, they wouldn’t be left hanging out there in the wind,” Ebbers told reporters last week following a luncheon speech at the National Press Club.
But acquiring companies-and an apparent need for wireless properties-does not mean MCI WorldCom ever tried to acquire Nextel Communications Inc., Ebbers insisted.
“Nextel did not get to the table. So I don’t know how to answer that,” Ebbers said in response to a question during the luncheon Q&A about what Sprint brings to MCI WorldCom that Nextel didn’t. Speculation was rampant last year that MCI WorldCom and enhanced specialized mobile radio operator Nextel would merge, but that the merger never reached fruition because MCI WorldCom was concerned about Nextel’s technology choice, among other issues.
The acquisition of Sprint will enable MCI WorldCom to become an “all-distance” telecommunications carrier, which Ebbers believes is necessary for telecom companies to succeed.
“The opportunity-in fact, the imperative-created by the [Telecommunications Act of 1996], was to become a full service provider for the communications needs of customers. If you are not all-distance in this business, you won’t go the distance,” Ebbers said. “That means providing local, long distance, international, data, Internet, wireline and wireless. All services-all distances.”
Wireless is a key component to an all-distance telecommunications company and Sprint’s wireless network is the “best, high-quality wireless operation in the universe,” Ebbers said.
Wireless voice is not the only thing that attracted Ebbers to Sprint.
“As we move into data wireless services, which are expected-and this is amazing-in four years, Merrill Lynch thinks that data-wireless data-will be bigger than wireless voice. And in the next four years, wireless voice is expected to grow seven times its current usage. The thing about Sprint wireless, it is by far unquestioned the best network for wireless data,” Ebbers said.
Notwithstanding the merger between the second- and third-largest long-distance companies, the marriage will not create a long-distance monster unresponsive to consumers, Ebbers said, noting that it will in reality be a merger between the fourth- and seventh-largest telephone companies.
Ebbers believes the merger will close within the year. Along these lines, the Federal Communications Commission-which must approve the transfer of Sprint’s licenses to MCI WorldCom-will meet with communications lawyers on Friday to discuss ways to structure the newly created merger review team.
This merger review team is expected to complete its examination of the Sprint-MCI WorldCom deal within six months after MCI WorldCom files all of the necessary paperwork.
The newly merged company is expected to be named WorldCom.
