Global One minus two

Convinced that it can make the 4-year-old international venture Global One profitable for the first time, France Telecom will pay $4.3 billion in cash and assumed debt to buy out partners Sprint and Deutsche Telekom.

Sprint's departure from the alliance - for $1.4 billion in cash and debt - was widely anticipated; the company's proposed merger with MCI WorldCom reportedly includes an agreement to share MCI WorldCom's network for international calls and Sprint PCS' wireless network, making Global One unnecessary.

But an expected France Telecom/Deutsche Telekom bidding war for Global One never materialized. Within hours of the Sprint announcement, France Telecom said it would pay Deutsche Telekom $2.75 billion for its stake.

Founded in 1996 to provide seamless international telecom for large corporations, Global One has lost $2.7 billion since its inception and posted 1999 sales of $1.1 billion, 60% lower than forecast. The company, which serves 30,000 business customers in 65 countries, suffered from the differing political agendas of its three co-leaders, said France Telecom's Chairman and CEO Michel Bon. Global One now will focus on commercial sales and wholesaling international voice and data to smaller carriers, he said. The company expects to break even by the end of 2002.

Daniel Caclin, currently France Telecom's executive vice president for data business, will become the new CEO of Global One. The company will open 30 access nodes in the main markets of Germany and the U.S within a year, he said. Sprint and Deutsche Telekom will continue to serve Global One customers in their territories for two years.