BUSINESSWEEK ONLINE : SEPTEMBER 25, 2000 ISSUE
INFORMATION TECHNOLOGY

How Telecom Companies Will Fare


The telecom industry appears to be headed for a shakeout in the next few years. Who is likely to survive? Here's a rundown of how the major players stack up against each other.

THE STRONG: SBC, VERIZON, BELLSOUTH
Big local-phone companies are best positioned to weather the fallout ahead. Their local-phone networks are more costly to duplicate than long-distance networks. So SBC, Verizon, and BellSouth are likely to see fewer rivals and only modest erosion in pricing for the next few years.

THE WEAK: AT&T, SPRINT
The long-distance business is falling apart fast--and it's projected to shrink more than 4% per year for the next four years. That will squeeze profits at AT&T and Sprint just as they need to invest in new growth areas. They may try to merge with others to shore up margins, but regulators are wary of too much consolidation.

THE TOSS-UPS: WORLDCOM, QWEST, GLOBAL CROSSING
Can WorldCom remain independent in the wake of its failed acquisition of Sprint? It has an Internet operation, but its long-distance business is troubled, and it lacks a wireless unit. Qwest also has a strong Net business and a local-phone operation with its purchase of US West. But Qwest may be too small to survive on its own. Ditto Global Crossing, which has international assets that other companies want.



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