Gartner believes Sprint will be acquired--its customers, shareholders and employees have already accepted the idea--but other carriers can become takeover targets, too, including VoiceStream Wireless, WorldCom and even AT&T.
Gartner forecasts the following scenarios for consolidation among large U.S. carriers:
International carriers, such as Deutsche Telekom, France Telecom and Nippon Telegraph and Telephone, will attempt U.S. takeovers (0.7 probability).
Additional incumbent local exchange carriers (ILECs) and major interexchange carriers (IXCs) will combine through 2002 (0.6 probability).
Highly leveraged companies, such as Qwest Communications and Global Crossing, could mount bids (0.3 probability).
U.S. regulators may object to the first scenario because foreign governments have at least minority stakes in these international giants. Under the second scenario, regulators will likely require ILECs and IXCs to remain at arm's length until local loops are fully open to competition or to sell off long-distance operations within local territories (much as with the Qwest-US West merger).
Having turned down the WorldCom-Sprint deal, regulators will be faced with other deals that will be no more palatable to them. The industry will likely put additional pressure on regulators to let consolidations continue. Furthermore, Gartner believes that U.S. regulations are out of touch with some marketplace realities in telecommunications.
The market will not clarify itself soon. Enterprises should expect major developments with the big U.S. carriers by year-end 2000. In addition, as ILECs win approval to offer long-distance services throughout their home territories (likely in 2002), further consolidation will occur.
(For related commentary on telecommunications, see TechRepublic.com--free registration required.)
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