MCI WorldCom Inc (Nasdaq :WCOM) shares retreated while Sprint Corp (NYSE: FON) rose 6 percent on reports that the second and third biggest U.S. long distance carriers are in talks to hook up.
MCI WorldCom shares were down 3 7/16 to 75 1/16. Sprint shares were up 2 13/16 to 53 15/16.
The possibility that MCI WorldCom would acquire Sprint's core business for stock was reported in Friday's Wall Street Journal, which cited "people familiar with the matter." The deal would give MCI WorldCom a national wireless network in the quickly consolidating telecommunications industry.
The article also said there are "obstacles significant enough to doom any deal" standing in the companies' way. The deal would face close scrutiny by regulators because the combined company would hold about 30 percent of the U.S. long distance market. Sprint's Global One alliance with partners France Telecom and Deutsche Telekom, which both hold a 10 percent stake in Sprint, would also cause problems, though the two companies would be unable to block the deal.
A merger would challenge AT&T Corp, (NYSE:T) which hovered up 1/16 to 42 1/2 Friday.
Sprint alone is valued at nearly $40 billion, and its wireless business, which it separated into its distinct PCS tracking stock, is valued at about $33 billion. Sprint's core services offset losses in the company's PCS division in its second quarter. Sprint has reportedly been in talks with other telecommunications heavyweights, though negotiations with MCI WorldCom have been gathering momentum.