This has been the week of the denial. Ebbers can go on TV all he wants to protest that he is not selling his company, but the truth is that WorldCom and a number of telecom giants could easily be gobbled up. Now, these companies' names are bandied about as bait in takeover rumors and speculation. Too many telecom companies got caught up in the frantic effort to build out the biggest and best new networks and services, only to saddle themselves with crushing debt. Meanwhile, WorldCom, the product of about 60 previous mergers, is suffering the hangover effects from its failed merger attempt and is desperately looking for new ways to grow its businesses.
Sprint is in the same boat.
Consistently disappointing earnings reports, compared with respectable earnings from the Baby Bells or the local phone companies such as SBC, have led to a situation where the most powerful telecom companies, or at least the weightiest, are the Bells. At these valuations, SBC could, conceivably, swallow WorldCom, though it would be an awfully large load for SBC to try to assimilate. The truth behind these numbers is that the former giants of American telecommunications are now potential takeover targets, despite any denials. At the same time, there is no indication that any of the strongest companies are ready to take that plunge because most have lingering issues from previous merger attempts. But even if no talks are in progress, it will be hard for companies to ignore such opportunities forever.