Five months after claiming he was uninterested in expanding into the wireless field, MCI WorldCom CEO Bernard J. Ebbers said his company is purchasing Sprint to roll out one-stop shopping for wireless and wireline telecommunications services.
The US$129 billion stock deal is the largest corporate takeover in US history.
"The one question I won't get today will be, 'What are you going to do about cellular?'" Ebbers said in a teleconference call with the international media.
Tuesday's acquisition by MCI WorldCom, the second-largest US long distance company, of Sprint, the third-largest provider, creates a powerful new rival to top-ranked AT&T.
It also gives WorldCom a much-needed wireless component to its wide-ranging telecommunications business.
"The long distance communications business isn't going to be the way we have traditionally known it. Customers are going to be buying packages of services," Ebbers said.
Ebbers saw the combination as a way for WorldCom to compete with the regional Bell operating companies, which currently dominate the local phone business. The Bell companies are currently barred from competing in the long distance market, but have been aggressively seeking approval from regulators to get into the business.
A key part of the combined strategy, executives said, will be to build up a nationwide wireless voice and data service. The key building block will be Sprint's PCS network, which currently supports over 4 million phones and 1.7 million paging customers.
The acquisition comes as rivals are rushing to put together combination service plans that include things like wireless, Internet access, long distance, and local service. AT&T, meanwhile, envisions package deals that include everything from high speed Internet access to cable television to local phone service.
But in WorldCom's case, building up its muscle will be a costly undertaking.
In all, WorldCom will pay $115 billion in stock and assume $14 billion in debt and preferred stock for Sprint.
The company said it would pay $76 in stock for each share of Sprint and said each share of Sprint's wireless unit, Sprint PCS Group, would be swapped for one new WorldCom PCS tracking stock and 0.1547 share of MCI WorldCom common stock.
MCI's lack of a wireless play has long been seen as the weak point in its telecommunications strategy. While Sprint has been building up its PCS network, MCI has largely stayed out of the race.
Earlier this year, MCI ended talks to acquire wireless phone company Nextel Communications and also backed away from bidding for AirTouch Communications, the nation's second largest cellular carrier.
In May, Ebbers told shareholders that he didn't plan to take immediate steps to get into the wireless phone business. That didn't satisfy investors, however, who continued to lambaste the company for its seeming lack of a wireless strategy.
