Sprint, WorldCom nix deal

WorldCom and Sprint officially called off their proposed $129 billion merger, stating that the Department of Justice's conditions would compromise the customer and financial benefits of the deal.

Late last month the European Commission and the DOJ rejected the merger, fearing that the combined company would threaten competition in the Internet backbone and U.S. long-distance markets, respectively. "The magnitude of the combination scared [regulators]," said Mark Heaton, a consultant for TeleChoice. "Some of the other big mergers are more regional. They didn't have the same scope and implications."

While the merger leaves WorldCom without a significant mobile offering once again, many feel the situation hurts Sprint more.

"They really are in a Catch-22," said Dataquest analyst Ron Cowles. "They've been taken to the altar and left. Now they may be too big to be bought... and they're not of the nature to go out and buy something bigger the way WorldCom did. And I don't think the market would accept it, anyway; those days are probably over."

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