Sprint Seeks Merger With Europeans

One day after ending merger talks with Electronic Data Systems Corp., Sprint Corp. said it was exploring a deal to sell a large portion of itself to two European telephone companies. The possible partnership with Deutsche Telekom of Germany and France Telecom of France, those countries' state-owned phone monopolies, would "concentrate mainly on providing seamless, global telecommunications services to business customers," Sprint said in a statement Tuesday. Details were not disclosed. But executives at Sprint, which operates the United States' third-largest long-distance network and owns local telephone systems, said the Europeans might purchase a special type of Sprint stock at above-market prices and gain seats on Sprint's board of directors. Sprint's merger talks with Electronic Data Systems, a Dallas-based computer services company, collapsed in part because of disagreement over the value of each company's stock.Any deal reached with the Europeans would face the scrutiny of U.S. and European regulators. "I'm sure there will be lots of inquiries," said an official at the Federal Communications Commission. U.S. law bars a foreign investor from directly owning 20 percent of any company licensed by the FCC. Indirect foreign ownership is limited to 25 percent, and must be approved by the FCC. The Justice Department reportedly is negotiating changes to a similar foreign investment plan in which British Telecommunications plc proposes to buy a 20 percent stake in the No. 2 U.S. long-distance carrier, MCI Communications Corp. of Washington. Though the European Union is pressing members to open their telecommunications markets, neither France nor Germany allows competition in its local or long-distance services.Sprint's move is part of a trend among telephone companies worldwide to form alliances that can offer large companies one-stop shopping for international long-distance services, a market estimated at $10 billion a year.