July 13, 2000: In what would later prove to be a wise decision, not because of the government's antitrust concerns, but because of WorldCom's accounting, Sprint walked away from its planned $120 billion merger with rival telecommunications provider WorldCom. The Department of Justice had filed suit against the pair leading to the deal's breakup. However, the government's opposition may have saved Sprint the pain that later befell WorldCom. In 2002, KPMG, which was hired to replace auditor Arthur Andersen, uncovered accounting irregularities that would eventually lead to a bankruptcy filing for the long-distance carrier and criminal charges for founder and former CEO Bernie Ebbers, and other executives. Following its 2003 exit from bankruptcy, the former WorldCom, which re-assumed the MCI name, was bought by Verizon in 2005 leading to a round of consolidation not seen in the telecom industry since 1999, when the Sprint-WorldCom marriage was first announced. In the latest round, Sprint acquired regional wireless providers ultimately culminating in the purchase of national provider Nextel Communications. Following the integration of the various wireless assets, Sprint in turn shed its wireline business, which is now known as Embarq. —Matthew Wurtzel
See story from The Deal archives
Continue reading below
