Sprint/WorldCom merger questioned at Justice Department

However, high-level negotiations between top Justice Department officials and company leaders in the next few weeks could swing the balance in favour of approval, company officials said.

Sources close to the merger and regulatory review of the deal confirmed published reports that said staff of the Justice Department's antitrust team intend to recommend against approval of the merger.

However, an MCI WorldCom spokesman said the important part of the approval process lies ahead as top executives meet to hash out an approval plan.

"We look forward to the opportunity to present the facts and our views to senior Justice Department officials in the next few weeks," Peter Lucht, an MCI WorldCom spokesman, said in a phone interview. "We still expect the deal will close during the second half of the year."

The Justice Department declined to give details of the approval process. "The matter is still pending," said Jennifer Rose, a Justice Department spokeswoman.

While the Justice Department staff opposes the merger, it is up to Joel Klein, chief of the antitrust division, to make a final decision, sources close to the companies noted.

Opinion varies over the final action the Justice Department will take about the proposed merger of the long-distance telephone giants.

"It could go either way," said Steve Koppman, an analyst with Dataquest. "Our [official] position is it will be approved with heavy conditions, although I think there is a significant chance it will be rejected."

The issues that must be examined if the companies were joined include pricing policies, local broadband access and whether or not the companies would be allowed to keep their Internet backbone units, Koppman said.