Merger's Likely Demise May Boost Choice

SAN MATEO (06/27/2000) - Big business telecom customers are likely lauding the fact that the grim reaper is now hovering over the proposed merger of WorldCom Inc. and Sprint Corp., according to one industry watcher.

Since the merger's announcement, enterprise customers have been put off over the idea of a combined company, said Patrick Liles, an analyst at Boston-based Yankee Group Inc. Those customers have long figured that the merger would create a monster company heavy on marketing but slim on customer service, Liles said.

"What this means for big business customers of ATM and frame-relay services is that in the near term they will not be facing a reduction in choice," Liles said.

Liles said that a chorus of corporate network managers had criticized the deal, which would cut down on the "name-brand providers" responding to enterprise calls for value added data and voice service.

"I had heard that there was some lobbying from large business users, based more on WorldCom's reputation for increased marketing and decreased customer service after buying MCI," Liles said.

The apparent demise of the pending merger, however, likely does not herald an end to high-profile mega-mergers. Instead, it probably reflects government regulators distaste for the particular dynamics surrounding the union of Kansas City-based WorldCom and Sprint, in Jackson, Mississippi, Liles said.

Look for quick suitors willing to stand in for WorldCom, Liles said, naming German-based carrier Deutche Telekom AG as the list topper.

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