France Telecom has emerged as the sole owner of international carrier Global One after Sprint and Deutsche Telekom sold their respective stakes within hours of each other on Wednesday.
Sprint, which is in the process of being acquired by US telco MCI Worldcom, was the first to abandon the venture by selling its stake for $1.13 billion and a repayment of $276 million in debt.
Deutsche Telekom later announced that it would sell its share to France Telecom for $2.76 billion and a debt repayment of $188.5 million.
The news follows months of uncertainty over Global One's future. Last April, US reports said Sprint chairman William Esrey had written to shareholders warning that the alliance would collapse unless Global One came up with a turnaround strategy within 180 days. By July, Gary Forsee had resigned as the venture's chief executive, after only 18 months in the job.
Analysts had originally expected MCI Worldcom to breathe new life into Global One by using it as a vehicle to penetrate overseas markets, but observers now believe the telco has changed its international strategy.
"MCI Worldcom already has capacity into Europe, so maybe it decided to expand internationally on its own," said Clay Ryder, chief analyst at Zona Research.
Observers were not surprised by Deutsche Telekom's move given its recent acrimonious relationship with France Telecom. The European carriers have taken their differences to court, with France Telecom accusing its German counterpart of a "fundamental breach" of their strategic alliance following Deutsche Telekom's failed bid for Telecom Italia.
France Telecom will now acquire the entire 71 per cent stake in Global One, formerly owned by Sprint and Deutsche Telekom, for a total equity value of $3.88 billion and a business value of $4.35 billion.
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