The pact called for Telefonica to distribute MCI's services in Spain. It didn't happen. Neither happened, and Telefonica has since created its own unit focusing on Italy. The two were to form a subsidiary to explore opportunities in Eastern and Southern Europe. It wasn't formed.
Relations are the most tense in Brazil, Latin America's largest market.
The two were supposed to cooperate on investments there but instead have become bitter rivals. Each company blamed the other and, in the end, both were fined by Brazilian regulators. Among the MCI executives stirring up trouble in Brazil is Jorge Rodriguez, who previously had been responsible for building strong relations with Telefonica as his company's chief representative to the alliance. ''That their differences emerged so publicly is yet another indication of virtually no cooperation between the two companies in Brazil, which is the most important Latin market for both of them,'' says Yankee Group Research Inc. analyst Carlos Guzman-Perry. And if MCI WorldCom consummates its rumored takeover of Sprint, that could prove to be one more demanding distraction that could keep MCI Worldcom from moving the Telefonica relationship forward. Spokesmen from both companies say that the partnership is alive, although executives on either side declined to comment for this story.