Deutsche Telekom (DT) has agreed to buy US mobile operator VoiceStream, giving the German telco access to a US wireless network that uses the same mobile standard as it uses in Europe.
DT will acquire the US operator, which has three million subscribers, for $50.7bn in cash and stock, in a move that will give it a foothold in the US market. Both DT and VoiceStream use GSM, the dominant standard in Europe, while most US operators use TDMA, including Airtouch, acquired last year by Vodafone.The acquisition, which is subject to regulatory approvals by VoiceStream shareholders, is expected to be completed in the first half of 2001.
However, the move could face barriers in the form of US regulation. Under US law, the purchase of a US telco by a company that is owned 25 per cent or more by a foreign government is prohibited. But DT has said that the German government has today agreed that it will reduce its majority stake to 45 per cent and will continue to reduce its stake over time.
Following board approval, VoiceStream will become part of DT's mobile telephony group. DT will pay 3.2 shares of its stock, plus $30 cash, for each VoiceStream share. It will also assume $5bn of VoiceStream's debt.
"This transaction is a unique opportunity to enter the US wireless communications market - one of the most attractive in the world," said Ron Sommer, chairman and chief executive of Deutsche Telekom. "As in other markets such as the UK with One 2 One, we are partnering with a rapidly growing, nationwide, domestic wireless company."
Deutsche Telekom bought UK mobile operator One 2 One for £8.4bn in August last year. It also announced in May this year that it will invest £600m in upgrading the network of One 2 One, improving the operator's national coverage.
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