MFS stake puts Don Sturm in telecom's emerging elite
Denver Business Journal - by Kevin Petrie Business Journal Staff Reporter
In the Cherry Creek offices of financier Donald Sturm, a western sculpture of a bear and a bull locked in mortal combat sits squarely on a coffee table.
Sturm, banking tycoon and consummate investor, has kept the bears at bay for three decades while he built an empire based on financial services, real estate and transportation.
Now the tall, plain-spoken, trim-looking investor vows to keep his record intact as he maneuvers through the world's riskiest industry.
"I am very active in telecommunications," said Sturm, who owns nine banks in the western United States, extensive real estate holdings, construction assets and a local medical care group that he started two years ago.
"Very active" is somewhat of an understatement. At last count Sturm, 64, owned 6.5 million shares -- valued at roughly $286 million -- of MFS Communications Co. Inc., a phone company based in Omaha, Neb.
For almost a decade, MFS, which Sturm helped launch, has connected business customers to long-distance phone services for discount rates. To expand its services MFS recently merged with UUNet Technologies Inc., an Internet company, and long-distance carrier WorldCom Inc.
Those deals reshuffled Sturm's hand in the telecommunications poker game, but he remains a devout shareholder who's keeping his seat at the table. During a lengthy interview, the unassuming businessman described plainly how MFS can tackle an industry that is deregulating under federal law.
"This business eats capital," Sturm said. "Voraciously."
In 1986, he and other top executives at Peter Kiewit Sons Inc., an Omaha construction firm, decided the capital expenditure was worth it, given the company's expertise in installing fiber-optic systems for AT&T and other telecom giants.
Kiewit launched a massive buildout of fiber-optic cables around Chicago, in a joint venture that became MFS.
Kiewit knew it could protect its downside risk by building the network at cost and simply selling the network to another carrier for a tidy profit. On the upside, they would create a new breed of phone company to wrest business from Ameritech, U S West and other Baby Bells. They achieved the upside.
Sturm said the company's expertise in construction and accessing city rights of way helped MFS grow. "We had a tremendous advantage, both in experience and know-how," he said.
As telecommunications deregulation takes hold, MFS intends to sell companies local calls, long-distance service and data messaging on the same bill. The company competes directly with Denver-based ICG Communications Inc. and Teleport -- a company backed by Tele-Communications Inc. in Englewood -- and a host of long-distance and local phone carriers in each market.
From real estate to banking to telecom is just another turn in the road for Sturm, who hasn't been afraid to seize opportunities when they came along.
Sturm's parents emigrated from Austria and raised him in Brooklyn, N.Y. He studied at City College of New York, then earned a law degree from the University of Denver through the G.I. Bill. Sturm is an Army veteran.
He made his mark at Kiewit soon after he was hired in 1963. Sturm reviewed an Internal Revenue Service inquiry and convinced the agency that Kiewit did not owe $35 million in taxes for amassing excessive earnings.
Sturm "has an ability to focus very quickly on the kernel of a business problem or opportunity," then formulate a plan for action, said Rich Jaros, president of Kiewit Diversified. For 10 years Jaros worked under Sturm, whom he considers a mentor.
Jaros himself owns a chunk of MFS, whose stock price has more than quadrupled since its initial public offering in April 1993. The stock is trading at $44.
Sturm is at heart a long-term investor, and in telecom these days the quick play can prove extremely risky. Gary Mammel, president of the Bank of Cherry Creek, said that "patience" is Sturm's greatest gift.
"He's comfortable with the long term," when managing the bank's portfolio, Mammel said.
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