Sprint Strikes Deal With French, German Firms : Telecom: Venture would offer services to multinational companies, compete with operations involving AT&T; and MCI.
France and Germany’s state-owned telecommunications giants have reached agreement with Sprint Corp., the third-largest U.S. long-distance carrier, on a global communications venture, the companies said Tuesday.
Deutsche Telekom and France Telecom, Europe’s two largest telecommunications groups, have ironed out all but the final details of a deal with Sprint in which the European carriers would take a joint stake of 20% in the Kansas City, Mo.-based phone group.
Deutsche Telekom said its supervisory board has approved the results of months of negotiations. “The final contract has not been signed yet, but the fundamental agreement has been reached,” a Deutsche Telekom spokesman said.
The companies plan to set up a joint venture to offer services for multinational companies, including basic voice, data and video services, international calling card services for private customers and services for other telecommunications firms.
The new venture, with the working title Phoenix, would compete against the Concert venture owned by British Telecom and MCI Communications Corp., the second-largest U.S. long-distance carrier, and the European Unisource group, which has a joint venture with AT&T; Corp.
“This decision is a big step for Deutsche Telekom on its way toward becoming a global enterprise,” Chairman Rolf-Dieter Leister said.
Negotiations with Sprint were initially expected to be concluded earlier this year, but talks dragged on as regulatory difficulties emerged and Sprint’s share price began to fall.
The French and German phone companies had agreed to pay $4.2 billion for the Sprint stake in two steps, at a time when shares were trading at $40. But in December, the share price fell to about $28.
On Tuesday, Sprint was trading at $32, up 37.5 cents on the New York Stock Exchange.
A Telekom spokesman said the companies have now agreed to let Sprint’s shares trade within an undisclosed band and to renegotiate the price if the shares move out of it. He gave no details about the price.
Anticipating that the deal could still face stiff regulatory hurdles, the three companies also agreed to renegotiate if the conditions for the venture are altered significantly by antitrust officials.
Changes to the planned “Atlas” alliance in Europe between France Telecom and Deutsche Telekom, which is being sharply scrutinized by the European Commission, could have a negative impact on the venture with Sprint.
European Competition Commissioner Karel van Miert sent an official warning last week to the French and German telecommunications firms saying the alliance could not be approved in its current form.
The deal with Sprint also needs the approval of regulatory authorities in Brussels and Washington.
