Sprint Ends Exclusive Pact With EarthLink

Long-distance company Sprint Corp. has given up its right to acquire EarthLink Inc., opening the way for the Internet service provider to be bought by someone else, the companies said on Friday in announcing the end of their exclusive alliance.

As Internet media companies try to compete with market leader AOL Time Warner Inc., industry analysts have said MSN, the Internet access and service arm of the world’s No. 1 software company Microsoft Corp., could be looking to buy other rivals to give it more market share. MSN’s recent decision to replace its aggressive $400 rebate on Internet access has heightened that speculation.

The original Sprint strategic pact included an equity stake and marketing and product alliances.

As part of the amended alliance, Kansas City, Mo.-based Sprint will be able to retain a 27% stake in EarthLink, but will relinquish its seats on EarthLink’s board, the companies said.

“I think what this means is that Sprint is getting out of the way and letting EarthLink be in play again,” said ING Barings analyst Youssef Squali.

Shares of EarthLink rose 34 cents, to $9.25 on Nasdaq. Sprint shares fell 83 cents to $23.82 on the New York Stock Exchange.

Under the alliance, EarthLink had to get permission from Sprint before doing any deals. The amended alliance also will allow the ISP to more clearly brand itself as it tries to gain market share against rivals, executives said. Sprint and EarthLink will no longer have to co-brand their Internet product offerings. Sprint will continue to market the EarthLink Sprint co-branded service to dial-up customers but may use EarthLink’s Internet software, e-mail and connectivity on a wholesale basis.