In Telecom, Money Can't Buy You (Fed) Approval

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Could it be true ó that in the big, bad world of American business, money isnít everything? Sprint board members are mulling a pair of monster cash-and-stock takeover offers from fellow telecom giants MCI-WorldCom ($65 a share) and BellSouth (an eleventh-hour $72 a share, both according to the Wall Street Journal). But though both offers could be the better part of $100 billion, CNNfn reports that Sprint will choose MCIís poorer dowry in a vote as early as Monday. What gives? The reason may be that a lack of post-handshake regulatory headaches may be priceless. "The FCC is a lot less likely to hold up a merger between long-distance companies (MCI and Sprint are Nos. 2 and 3 in that market, respectively) because thereís already a big fat competitor sitting right there," says TIME business writer Karl Taro Greenfeld. "In fact, some of the impetus for MCI to buy Sprint may be to save money and compete even more with AT&T."

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BellSouth has the cash to outbid almost anyone, but that $7-a-share premium is for a deal that could face serious problems going through. "This is a Baby Bell trying to get into long distance, and BellSouth alone has already been rejected [as a potential long-distance carrier] by the FCC three times," says Greenfeld. "Until AT&T can make a real business out of offering local service over their phone lines, the FCC is likely to make any BellSouth wait Ė- and that doesnít even include state-by-state approval by state regulators. God knows how long how thatcould take." The stock market, meanwhile, doesnít seem to much care who wins; as long as big companies are throwing their weight around again, traders donít even have time to worry about the Fed (meeting tomorrow. The smart moneyís on no rate hike). Sprint shares were hopping Monday on the news of a duel for the maidenís hand, and the Dow and NASDAQ alike were following suit. At least some folks still know the value of a wheelbarrow-ful of the green stuff.