Sprint Says it Will Sell Global One Stake
Sprint Corp. said Wednesday that it will sell its stake in money-losing international joint venture Global One to Deutsche Telekom and France Telecom for $1.13 billion in cash, dramatically less than initially forecast.
The long-distance company decided to shed its stake in Global One so it could concentrate on its planned $115-billion acquisition by larger rival MCI WorldCom Inc., which is building vast international networks.
The sale of Sprint’s Global One stake values the entire venture at about $2.7 billion, which is far less than the $10-billion value Global One executives attached to the venture last fall. France Telecom and Deutsche Telekom also would assume $276 million in Global One debt that Sprint had held, Sprint said.
Sprint said it would record an unspecified gain in the quarter during which the deal closes. The deal may take several months to complete and may be subject to scrutiny by the European Union. Shares of Kansas City, Mo.-based Sprint fell 63 cents to close at $61.13 in New York Stock Exchange trading.
The long-awaited sale of Sprint’s nearly 50% stake is just the first step in resolving the fate of the troubled Global One joint venture, which provides international voice and data services to large corporations in more than 65 countries.
France Telecom and Deutsche Telekom now must decide which company would take control of Global One.
Deutsche Telekom said it aims to settle the issue by the end of this month but declined to comment further. France Telecom officials couldn’t be reached.
Four-year-old Global One, which had 1998 revenue of more than $1.1 billion, never lived up to the partners’ expectations.
Relations between the two European partners soured last year after Deutsche Telekom made an unsuccessful bid for Telecom Italia without informing France Telecom as required by their partnership.
Sprint’s multinational customers would continue to be served by the Global One networks for at least two years under terms of a transition agreement with its European partners. Sprint would slowly transfer services to Clinton, Miss.-based MCI WorldCom’s new networks.
Sprint said it was released from some exclusivity and non-compete clauses of the Global One agreement, but is prohibited from offering competing services to certain customers until one year after the deal closes.
Global One said it would quickly set up a strong operational and sales presence in the United States to replace the absence of Sprint.
France Telecom and Deutsche Telekom each hold a 10% stake in Sprint and agreed to vote their stakes in favor of Sprint’s planned acquisition by MCI WorldCom, Sprint said.
