Longer distance: Will MCI WorldCom make a run for Sprint?

As Bell Atlantic attempts to squeeze into the long-distance line-up, Sprint and MCI WorldCom are rumored to be considering bolstering their offerings by merging.

Neither company would comment publicly, but the possibility of such a powerful telecom marriage had the industry buzzing last week. For MCI WorldCom, the wireless presence of Sprint is the biggest draw.

"There has always been some question about what the MCI WorldCom wireless strategy may be, and the pressure may have gotten stronger," said Paul Glenchur, an analyst with The Schwab Washington Research Group.

Sprint may be making a good move by playing its wireless crown jewel, said Roger Wery, executive vice president at Renaissance Worldwide.

"Sprint is in the best position to do this right now because two or three years down the road they may lose some shareholder value," he said.

If the companies were to merge, MCI WorldCom would have more to gain than just Sprint's wireless properties. The companies would be able to combine their Internet backbones, selling off the overlapping parts to fill in any existing gaps, Wery said.

Long-distance competition also is a likely driver of the deal because the No. 2 and No. 3 long-distance carriers probably will face competition from RBOCs in the near future-in addition to the opposition they already face from AT&T.

"MCI WorldCom is looking toward the time when the RBOCs get into the long-distance market, and it is looking a lot more attractive with Sprint," said Rob Norcross, vice president at Mercer Management Consulting.

One reason these companies would work so well together after RBOCs enter the long-distance market is that AT&T still is associated with the Bell companies in many consumers' minds and may have some trouble differentiating itself, Norcross said. By combining the two non-Bell-associated companies, MCI WorldCom and Sprint could create a powerful brand.

Another reason the companies may be looking to merge is that Deutsche Telekom, which currently holds 10% of Sprint, has been looking for an international play. And that "may not be something that Sprint would have liked culturally in the long run," Wery said.

Although the reasons to combine may be great for the companies, the regulatory side of a merger this large is always tricky. The FCC said it did not want to see any more long-distance deals that would concentrate the market, but it could be difficult for the FCC to maintain that position given the current competitive climate, Glenchur said.

"It would be hard to let the RBOCs in on the one hand and at the same time say that the market can't handle the loss of Sprint," he said.