Why Less Is More for MCI Worldcom's Sprint Deal

  • Share
  • Read Later
Rootin', tootin', acquisition-mad MCI Worldcom chief Bernard Ebbers may have finally met his match: the antitrust boys at the Justice Department. Ebbers' proposed $130 billion hookup with Sprint — the latest in a spectacular string of acquisitions by the southern-fried CEO — would be one of the largest corporate mergers ever, a joining of the No. 2 and No. 3 long-distance carriers that posed a serious threat to leader AT&T. But now Justice staffers have formally recommended to head trustbuster Joel Klein that the merger be blocked, on the grounds that a company with one third of the U.S. long-distance market and a dominant position in the Internet switching business would control too much information infrastructure to be healthy for consumers.

Klein has invited lawyers for both of the betrothed to come to his office and defend the marriage, but MCI Worldcom isn't wasting any time making the deal look more palatable. The company reiterated that it is willing to sell all or part of its Internet "backbone" — the switching-provider part of the deal, which also worries European regulators — to help soothe antitrust regulators. A spokesman said Thursday that the company currently is in the process of defining exactly what business units are a part of that backbone and spinning them off into a separate division. Meeting the feds halfway is usually the best way to deal with them, and if Ebbers has to give up some of his routing dominance, so be it: It's AT&T's phone business he's really gunning for.