Sprint filed with the Securities and Exchange Commission to register for sale 152 million shares--worth more than US$3.4 billion at today's closing price--held by Deutsche Telekom and France Telecom. The sale would cut each company's stake to 1.3 percent of Sprint's common stock from 9.9 percent of the third-largest US long-distance company.
The two European companies are struggling to cut their debt, which ballooned to a combined US$90 billion last year as they made acquisitions and bought permits to offer faster Internet access on mobile phones. The companies paid about US$3.7 billion for their combined 20 percent stake in Sprint in 1996. They'll retain US$2.6 billion worth of Sprint's PCS Group wireless unit.
"All of us expected them to liquidate their positions over time," Lehman Brothers Inc analyst Blake Bath said. Still, "it wasn't clear that they were going to dump all of their stock on the market at once."
The sales could depress Sprint's share price, Bath said.
The sales further unwind ties between the three companies, which abandoned their unprofitable Global One venture a year ago, when France Telecom bought out its partners.
Underwriters have been given an option to sell another 22.8 million shares, representing all of Deutsche Telekom's and France Telecom's remaining shares, if needed to meet investor demand, the filing said.
PCS stakes
Deutsche Telekom would continue to hold 57.4 million shares of Sprint's PCS wireless tracking stock, and France Telecom would hold 56 million PCS shares, the filing said.
Goldman, Sachs & Co, Morgan Stanley Dean Witter & Co and UBS Warburg LLC are underwriters for the stock sale, the filing said.
Westwood, Kansas-based Sprint's shares today rose US$0.50 to US$22.60.
Sprint shares have fallen more than 60 percent in the past year as long-distance prices plunged. Shares of France Telecom and Deutsche Telekom have also dropped on concern they won't be able to finance their expansion plans.
France Telecom, which plans to sell stakes in other companies including Sema Plc and STMicroelectronics NV, aims to cut its 60 billion euros (US$55 billion) of debt in half by the end of 2002. Last week, Standard & Poor's and Moody's cut the company's credit ratings after it raised a third less than it expected from the sale of shares in its Orange SA wireless unit.
The company today said it plans to sell as much as US$8 billion in bonds to refinance existing debt.
Deutsche Telekom, whose credit ratings also are at risk of being cut by S&P and Moody's, delayed a bond sale in Japan this week because of investor skittishness.
1996 Investments
Deutsche Telekom and France Telecom bought their stakes in Sprint in January 1996 when the three companies formed Global One, a business that sold communications services to multinational companies. At the time, France Telecom and Deutsche Telekom bought US$3 billion worth of Sprint shares.
The companies also agreed to buy US$500 million to US$700 million more Sprint shares in the first half of 1996. According to a January 1996 France Telecom news release, the combined investments were worth US$4.2 billion when Sprint's PCS wireless unit, which hadn't yet been spun off, was included.
Four years later, France Telecom agreed to buy out its Global One partners for US$4.36 billion in cash and assumed debt.
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