Sprint voices merger fears

Worldcom chairman Bernie Ebbers shares Sprint's concerns

Telecoms company Sprint has voiced its concerns that its proposed merger with MCI Worldcom will not get government approval.

The US Justice Department fears the $130bn merger could erode competition in the long distance telecoms market.

"We have had a number of high-level meetings with Justice Department officials in recent weeks, but it remains unclear if we will or will not get the necessary government clearances to implement the merger, " William Esrey, Sprint's chairman and chief executive told shareholders.

If approved, the $130bn merger would be one of the biggest in history.

The new company would control much of the world's network which carries the internet.

In addition, it would become the largest long-distance carrier in the United States, and become a major player in mobile phones with one of the few nationwide networks in America.

Decision imminent

Mr Esrey said a decision by the Justice Department should come in the next few weeks.

"The staff of the Department of Justice has recommended the merger be blocked. It is also apparent that the staff recommendation is being taken seriously by senior officials," Mr Esrey added.

US officials are thought to have met with Worldcom's boss Bernard Ebbers to discuss the deal.

One of the sticking points is thought to be Worldcom's own internet business UUNet Technologies.

Mr Ebbers has said he will never sell that business - despite speculation that that is what the Justice Department wants it to sell. This is considered WorldCom's most profitable sector with $3.5bn in revenues.

European fears

The European Commission has a deadline of 12 July to make a ruling on the proposed merger.

It is expected to take its lead from the US Justice Department, Mr Esrey said.

The EU is worried that after the merger the bulk of Europe's internet backbone would be controlled by just two American companies.

European labour unions representing communications workers have urged Brussels to block the deal.

The Worldcom internet network is three times larger than its nearest rival, and makes up half of the existing market.