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Sprint sees European backers cash out

Deutsche Telekom and France Telecom like the U.S. market, but they don't like Sprint enough to hold on to their combined 20 percent ownership.

In the final chapter of an awkward transatlantic partnership, Deutsche Telekom and France Telecom have said they will sell on the open market their respective 10 percent stakes in Sprint for as much as $4 billion.

The ownership stakes are what is left of the former Global One partnership, which ended about a year ago. AT&T and British Telecommunications, meanwhile, are struggling with their Concert joint venture; and although the companies will confirm only that talks have taken place about restructuring, reports have said AT&T is seeking to gain control of Concert.

Sprint now finds itself in a tough position on Wall Street, with as much as 175 million of its shares suddenly set to come on the market later this quarter. With some 20 percent of its stock available for sale, there is concern that the company's stock, which was trading above $60 in June but closed at $22.60 Tuesday, could suffer a further shock.

France Telecom said in a statement that the Sprint sale was part of its plan to sell "non-strategic assets" to reduce debt. Telekom also cited debt reduction as the reason to sell its Sprint stake.

"I continue to be very optimistic about Sprint's future growth," company Chief Executive William Esrey said Tuesday in a filing with the Securities and Exchange Commission.

Sprint recently disclosed that its first-quarter earnings per share would be about 14 cents less than the 44 cents per share consensus by First Call and would also come in at the low end of estimates for 2001 earnings.

In January 2000, France Telecom took over Sprint's share of Global One and bought Telekom's share, ending a partnership that was supposed to compete across the globe with AT&T, BT, WorldCom and others in providing advanced telecommunications services. Low revenues and political conflicts contributed to the dissolution.

The sale of the Telekom and France Telecom stakes had been expected, but the possibility of all the shares being offered simultaneously was not. Telekom still has not offered a firm schedule for the sale of its shares.

Sprint identified the underwriters for an offering of 152 million shares on behalf of Telekom and France Telecom as Goldman Sachs, Morgan Stanley Dean Witter and UBS Warburg.