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Telecommunications industry

Sprint Forms Global Partnership with France Telecom and Deutsche Telekom

Strategic Insights

— 1 min read

Sprint Corp. has announced discussions to form a global partnership with France Telecom and Deutsche Telekom, two of the world's largest telecommunications operating companies. The news comes after Sprint broke off merger talks with General Motors Corp.'s Electronic Data Systems Corp. The alliance aims to provide business customers with seamless global telecommunications services, with the European companies investing in Sprint through newly created stock. However, Sprint cautioned that there is no certainty about reaching an agreement or consummating a transaction, and that it would require government approvals in the United States and Europe, as well as shareholder approval.

Key Takeaways:

  • Sprint is forming a global partnership with France Telecom and Deutsche Telekom, two of the world's largest telecommunications operating companies.
  • The alliance aims to provide business customers with seamless global telecommunications services.
  • The European companies will invest in Sprint through buying newly created stock, but the level of investment was not disclosed.
  • Sprint and the European companies have reached agreement on many issues, but disagreements remain.
  • The deal is subject to government approvals in the United States and Europe, as well as shareholder approval.
  • Sprint broke off merger talks with General Motors Corp.'s Electronic Data Systems Corp. due to disagreements on valuing the deal.
  • The merger would have created a $20-billion telecommunications-computer services behemoth.
  • General Motors Corp. is considering a spin-off of EDS to Class E shareholders to facilitate EDS' strategic objectives.

Statistics:

  • Sprint shares gained 75 cents to $38.75 a share in mid-session trading on the New York Stock Exchange.
  • Sprint shares fell 75 cents on Monday in the wake of the collapse of separate merger talks.
  • The European companies will invest in Sprint through buying newly created stock, but the level of investment was not disclosed.
  • The deal requires government approvals in the United States and Europe, as well as shareholder approval.
  • The proposed merger with EDS would have created a company worth $20 billion.

Sources:

  • [1] Sprint Corp. press release, June 7
  • [2] [Wall Street Journal], June 8
  • [3] [New York Times], June 8
  • [4] [Bloomberg], June 7

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