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Each day that passes without WorldCom Inc. and Sprint Corp. formally terminating their $119 billion merger intensifies speculation that the two companies might not want to surrender. The WorldCom bid is too good a deal for Sprint to let go of without a fight, telecom experts suggest. And while antitrust regulators on two continents have rejected the merger, lawyers for the companies have crafted an argument for allowing the combination — the industry’s phenomenal growth has created healthy competition — that might be worth litigating. Then there’s the Ebbers factor. George Dellinger, telecom analyst at Washington Analysis, posits that Bernard Ebbers, the persuasive WorldCom chairman and CEO, might be trying to salvage the deal by convincing Sprint shareholders to unload all of its businesses except its PCS wireless unit. “In any other case involving anyone except Bernie Ebbers, I would say the deal is absolutely done,” Dellinger said. “But with Ebbers and his ability to make bold moves at the last minute, you have to keep watching.” Ebbers would have some powerful ammunition. Analysts believe Sprint would be unlikely to receive anything approaching the $76 a share WorldCom would pay — not even from Germany’s Deutsche Telekom AG, the consensus most-likely acquirer. In addition, were Sprint shareholders to approve a Deutsche Telekom deal, they would have to wait yet another year for a payday. Finally, regulators on both sides of the Atlantic might make all sorts of new divestiture demands on Sprint and DT — principally that the German government lower to less than 25% its current 59% stake in the company — thereby diluting value. “What would a Sprint shareholder want more: a sure thing although a smaller deal or the possibility of a larger deal but with a lot more uncertainty?” Dellinger asked. The decision, as always, should turn on price. Could Sprint Chairman and CEO William Esrey sell the company’s consumer long-distance business at a reasonable price? And what would Ebbers agree to pay for Sprint PCS Group? The original $76 a share WorldCom agreed to pay for Sprint represented a 25% premium over the company’s closing price of $60.87 Oct. 4, 1999. At the close of trading Wednesday, Sprint shares stood at $53.31, while Sprint PCS was priced at $59.43 a share. WorldCom ended the day at $45.43 a share. Donaldson Lufkin & Jenrette Inc.’s Richard Klugman points out that buying Sprint PCS, currently a tracking stock, would require a wholesale reordering of the company. If Ebbers and Esrey are seriously considering a Sprint breakup, investors could understand why an announcement clarifying the merger’s future hasn’t come sooner. “There is a desire for closure,” Klugman said. “Then again, there is a belief that the sum of the parts is worth more than buying the whole thing.” Working in Ebbers’ favor is the common perception that Sprint shareholders would not find another suitor willing to pay as much as WorldCom is. “Those days are gone,” said one analyst close to the deal. Esrey, therefore, might want to do a deal — any deal — with WorldCom. Deutsche Telekom CEO Ron Sommer likes Sprint, said Patrick Comack, telecom analyst at Guzman & Co. in Miami, but he won’t match WorldCom’s initial bid largely because the global telecommunications field is far more crowded than in October 1999 when the Sprint acquisition was announced. Wireless companies such as Nextel Communications, Inc. and VoiceStream Wireless Corp. have blossomed, along with new long-distance outfits such as Williams Communications Group, Inc. The increase in telecom power brokers leads back to the question of litigation. In suing to block the deal, the Department of Justice argued that a merger of the two companies would not only narrow Internet traffic market competition but weaken consumer choice for domestic and international long distance service. For months, attorneys representing Sprint and WorldCom argued that the advent of telecom companies and the entrance of the Baby Bells into long-distance made for a more dynamic industry. But their arguments were unavailing. “The fact that [WorldCom and Sprint] haven’t called it off yet suggests that one or both are thinking about whether to litigate,” a source close to the negotiations said. Comack, though, is convinced the deal is kaput. WorldCom, he said, is just waiting for Sprint to agree to terminate the merger agreement so it can avoid a $2.5 billion breakup fee. And he suggests that WorldCom may choose to sell its consumer long-distance business and concentrate on the corporate customers the company served before buying MCI Communications in 1998 for $37 billion. “Before MCI, WorldCom didn’t have this slow growth long-distance business,” Comack said. Abandoning the Sprint deal, he adds, “would return them to their roots.” Copyright �2000 TDD, LLC. All rights reserved.

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