WorldCom backs out of Sprint fixed wireless deal

WorldCom and Sprint still haven't said they plan to drop their $US129 billion merger plan in the face of opposition from US and European government regulators, and spokesmen for the two companies are declining to put a time frame on when they expect to announce a decision.

But analysts believe an announcement regarding killing the proposed merger is imminent. And in a related development, WorldCom last week backed out of a press conference that Sprint is holding Monday in New Orleans to detail plans to create a common set of standards and operating procedures for carriers who provide fixed wireless communications services.

Last Monday, a Sprint spokesman said the announcement at the annual conference of the Wireless Communications Association International would involve a "joint deal" with WorldCom in the fixed wireless area. Both companies have spent billions of dollars to acquire frequency spectrum that lets them bypass local phone companies and deliver broadband data services directly to businesses and homes.

The fixed-wireless deal was supposed to have "nothing to do with the merger" between the two companies, the Sprint spokesman added. But later in the week, Sprint said WorldCom had decided not to participate in the press conference after all.

Ian Gillott, an analyst at International Data Corp, said the fact that WorldCom backed out of the New Orleans press conference with Sprint provides a strong indication that there's "no relationship anymore" between them. "They're competitors again," Gillott said. He added that he expects a formal announcement of the dissolution of the planned merger to follow in the near future.

WorldCom's planned acquisition of rival Sprint was thrown into doubt two weeks ago when the US. The Department of Justice (DOJ) sued to block the merger because of concerns that it would reduce competition in the internet backbone services business and other parts of the telecommunications industry.

The DOJ's move came after the European Union's top antitrust regulator said he also expected to recommend that the merger be stopped. WorldCom and Sprint -- two of the three largest telecommunications vendors -- subsequently withdrew an application for approval of the planned acquisition by the European Commission, but they haven't said anything official about the status of the deal since then.

Meanwhile, Sprint said Monday's announcement in New Orleans is an attempt to introduce some common approaches for fixed wireless services, which currently operate in multiple portions of the radio frequency spectrum with few standards among the carriers that provide the services.

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