WorldCom, Sprint still confident of merger

Matt Moore

Wednesday, May 31, 2000 | 11:19 a.m.

Nevada PUC OKs merger

The proposed merger between WorldCom and Sprint was approved by Nevada regulators.

The Public Utilities Commission of Nevada last week determined that the merger would not be anticompetitive in the state and voted to allow it. Nevada was the 11th of 24 states needed to authorize the deal.

The PUC was assured that Sprint would not attempt to recover merger expenses through higher phone rates in Nevada. Sprint also said it would add 19 employees to work with local exchange companies that have agreements with the company to carry their phone traffic.

Sprint operates the dominant local telephone system in Las Vegas.

JACKSON, Miss. -- WorldCom Inc. and Sprint Corp. officials rejected the European Commission's concerns their planned $115 billion merger would have too much power in Internet access and other telecommunications services.

At a closed-door European Commission meeting Tuesday in Brussels, Belgium, J. Richard Devlin, executive vice president and general counsel for Sprint, reiterated his company's pledge to sell its Internet unit in order to get regulatory clearance from the EC.

Clinton, Miss.-based WorldCom, however, won't sell its UUNet subsidiary and would scuttle the deal if forced to as a condition for merger approval. The EC made MCI sell its Internet business during its 1998 merger with WorldCom.

The EC is concerned that both companies could restrict the number of choices by business customers, including multinational companies, for access to the Internet, particularly in Europe.

Ramkrishna Kasargod, a telecommunications analyst with Morgan Keegan & Co. in Memphis, Tenn., said many of those concerns are probably unfounded.

Kasargod said Sprint's willingness to shed its Internet division is probably enough to assuage fears that the combined WorldCom would have too big a hand in offering Internet access.

Michael Salisbury, WorldCom's executive vice president and senior counsel, said Tuesday's hearing consisted mainly of American competitors presenting their concerns about the merger.

"That should be a good sign for regulators that this is a competitive merger," he said during a conference call Tuesday.

Salisbury, who did not attend the meeting, but was briefed on it, said other speakers included British Telecommunications PLC, members of the EC and labor unions.

Clearing the EC's regulatory hurdle is the first step in consummating the merger. Tuesday's hearing drew more concern because recent published reports said the U.S. Department of Justice has some concerns about the merger.

The EC must decide by July 12 whether to approve the merger. Commission spokeswoman Amelia Torres said a decision about the merger could come as early as "July 5 or even June 28."