After buying up one US long-distance carrier after another, Mr Bernard Ebbers may finally be reaching the limit of what US federal regulators can stomach. And he indicated Europe would be the next target for the enlarged group.
That buying Sprint would be no pushover for the MCI WorldCom chief executive was made clear yesterday by Mr William Kennard, the chairman of the US Federal Communications Commission.
"How can this be good for consumers? The parties will bear a heavy burden to show how consumers would be better off," he said.
Facing this regulatory caution in the US, Mr Ebbers clearly identified Europe as the next target for the enlarged group.
He said he planned to ditch long-distance carrier Sprint's Global One international alliance with Deutsche Telekom and France Telecom immediately and continue MCI's push into European markets alone. "Our network in Europe will look just like the network in the US," he said.
The US telecoms industry has seen frenzied merger activity recently, while the European market has remained dominated by former state-owned monopolies, and Mr Ebbers warned: "Most companies in Europe would not be survivors in a transaction between US and European telecoms companies."
National sensitivities in Europe, however, meant such deals were unlikely for some time, he added. "If you bought Deutsche Telekom today you would be buying the German government, not a telecoms company," Mr Ebbers said.
Mr William Esrey, Sprint's chairman and chief executive, said Global One was likely to be bought within two months by one of Sprint's two European partners. In recent days, Deutsche Telekom and France Telecom, both 10 per cent shareholders in Sprint, have fought against an MCI takeover, instead backing a BellSouth bid for Sprint, which the board rejected in favour of the MCI bid.
In the US, based on 1997 figures, MCI and Sprint between them accounted for little more than 20 per cent of the consumer market, compared with about 60 per cent for AT&T.
Including business customers, MCI would have a market share of just over 30 per cent, compared with about 45 per cent for AT&T, but since then both companies have made big inroads into "Ma Bell's" territory.
Even though the new WorldCom's long-distance business will still be far smaller than that of AT&T, the prospect of a duopoly controlling 80 per cent of the market clearly makes Mr Kennard nervous.
The MCI-inspired price war that broke out three months ago will provide ample evidence for MCI's critics. The firm's move to cut consumer long-distance rates to five cents a minute was seen at the time as a direct attack on Sprint, which remains far more dependent on the consumer business than either MCI or AT&T.
But MCI executives contend a combination with Sprint would create what they call a "third force" in the consumer telecoms business, a firm powerful enough to take on both AT&T and the Baby Bells.
