WorldCom, Sprint call off $120 bn deal

In a statement, WorldCom chief executive and president Bernard Ebbers said the benefits of the merger had been "clear and compelling." Federal regulators’ opposition adds to policies that "ultimately will reduce innovation and choice, and raise the cost of telephone services, for residential customers, particularly those in rural America," Ebbers said.

The merger plan had sparked controversy from the moment it was announced in October. Federal Communications Commission Chairman William Kennard initially said the combination would represent a "surrender" from the robust competition that had driven down the cost of long-distance calls for consumers.

WorldCom and Sprint could become attractive takeover targets for international companies such as Deutsche Telekom AG and Nippon Telegraph and Telephone Corp, analysts said. The foreign companies are trying to get footholds in the US market, the world’s biggest. WorldCom also could shed its consumer long-distance business and focus on the more lucrative business of providing data, Internet and international communications services to corporations, sources have said.