MUNICH (01/26/2000) - Sprint Corp. today detailed its agreement for disengaging itself from Global One Communications Inc., its global partnership with Deutsche Telekom AG and France Telecom SA.
For its share in the alliance, Sprint will receive from its partners US$1.13 billion in cash and have $276 million in debt repaid, according to a statement from the U.S. carrier. The transaction is expected to be completed within the next few months.
Sprint already said it would pull out of Global One, which delivers voice and data services to corporate customers, after its merger agreement with MCI WorldCom was announced in October.
Part of today's agreement is to verify that Sprint customers who now use Global One's international services have a smooth transition. The agreement calls for Global One to keep servicing these customers for at least another two years.
The agreement also releases Sprint from certain exclusivity and non-compete clauses with its Global One partners, but bars it from offering services that compete with certain customer contracts for one year, Sprint said.
Deutsche Telekom and France Telecom have assumed sole responsibility for financing Global One, Sprint said.
The two carriers, each of whom currently own 10 percent of Sprint, have also agreed to give up their rights as Class A shareholders and resign their seats on Sprint's board of directors. In addition, France Telecom and Deutsche Telekom are relieved of certain limits on transferring their equity interests in Sprint FON Group and Sprint PCS Group.
These changes will occur after Sprint's shareholders approve its merger with MCIWorldCom, Sprint said. Deutsche Telekom and France Telecom will also vote their shares in favor of Sprint's merger with MCI WorldCom.
As a result of the agreement, Sprint's equity share of the results of Global One will be reported as a discontinued operation in FON Group's 1999 fourth quarter earnings report, Sprint said.
Sprint did not specify how much each of Global One's remaining partners would contribute to the payout amount. Genia Vargaftig, a spokeswoman for France Telecom, said this afternoon that she could not immediately comment on the agreement, and Deutsche Telekom could not be immediately reached.
Last week, Deutsche Telekom said the two carriers plan to shortly each name a price for the remainder of Global One, with the prize going to the highest bidder. [See "Deutsche Telekom, France Telecom Battle for Global One," Jan.
(Peter Sayer in Paris contributed to this article.)Sprint, in Westwood, Kansas, can be reached at +1-913-624-3000 or at http://www.sprint.com/.