Sprint’s Linkup With 2 European Telecom Firms Runs Into a Snag : Communications: Joint venture with German and French companies won’t be approved in its current form.

BRUSSELS — Sprint Corp.’s telecommunications joint venture with Deutsche Telekom and France Telecom can’t be approved in its current form, said the European Union’s top competition official.

The U.S. Justice Department Thursday approved an agreement under which Sprint will sell a 20% stake in the company to the two European phone monopolies for as much as $4.2 billion. The approval came with several qualifications, including a condition that other U.S. companies must be able to gain the same access to the two European markets.

The venture must receive European Union approval before it starts providing joint services. If the alliance is not approved, it would be a blow to Westwood, Kan.-based Sprint, which is behind its U.S.-based rivals MCI Communications Corp. and AT&T; Corp., in the race to capture a piece of the $180 billion European telecommunications market. MCI and AT&T; have already formed similar international alliances and are offering services.

In a related development, MCI plans to challenge the Justice Department’s approval of the deal. The consent agreement between Sprint and Justice allowing the deal to go through fails to adequately protect U.S. companies from the foreign phone companies’ monopoly powers, MCI said. A federal court can accept, reject or modify the decree.

European Union Competition Commissioner Karel van Miert said German and French progress toward opening their national telecommunications markets “isn’t satisfactory” and would impede approval for the joint venture. Deutsche Telekom and France Telecom are in a separate joint venture called Atlas.

“I agree that the Sprint deal combined with the Atlas deal serves to make (Deutsche Telecom) and France Telecom too strong of a monopoly power,” said Chris Heckart, directory of broad-band consulting at TeleChoice Inc., the Verona, N.J.-based market research firm.

Together, the three companies want to provide business voice and data services to companies around the globe. The venture would then be extended to consumer services after restrictions on access to European phone markets for domestic phone calls are stripped away in 1998.

The alliance must also be approved by the Federal Communications Commission in the U.S. before it can start operating. Analysts expect FCC approval in the coming weeks.

Van Miert, whose department is responsible for competition policy throughout the 15-nation EU, said Germany in particular has been sluggish in opening its national market.

“There’s been progress on the French side but with Germany it’s still a little bit unclear whether it’s opening up or not,” van Miert told Bloomberg Business News before speaking at a conference on EU state aid policy in London.

Deutsche Telekom and France Telecom control about three-quarters of the market for business-to-business services in their countries. The commission is concerned that closer ties between the two companies will shut out competition even further.