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To: Ramsey Su who wrote (33240)	6/25/1999 3:13:00 PM
From: Ruffian	Respond to of 152472

GSM Super Power> From the June 28, 1999, issue of Wireless Week VoiceStream, Omnipoint Forge GSM Superpower New Player Should Stir Competition By Rikki Lee and Monica Alleven A merger between VoiceStream Wireless Corp. and Omnipoint Corp.--the nation's two largest global system for mobile communications operators--offers the promise of creating a fourth nationwide wireless carrier. The deal also gives GSM proponents a leadership position they've been searching for since networks began launching in November 1995. Last week's merger agreement between Western Wireless Corp. spinoff VoiceStream of Bellevue, Wash., and Omnipoint of Bethesda, Md., didn't raise many eyebrows. The debt-ridden Omnipoint had been seeking a partner during the past year, and VoiceStream's parent led the pack as the most likely suitor. To avoid the appearance of collusion, acquisition talks could not proceed until the April conclusion of the FCC's personal communications services license re-auction. Once the merger was announced, however, industry eyes widened at the deal's numbers: With networks from Honolulu to New York City, the new VoiceStream holdings--including the carrier's joint venture with Cook Inlet Region Inc.--will cover 17 of the top 25 U.S. markets, or more than 175 million POPs. At the end of first-quarter 1999, the two companies served about 900,000 subscribers. Brenda Maxfield, spokeswoman for the Personal Communications Industry Association, said: "We believe it will certainly help the GSM industry by providing a nationwide carrier to compete head-to-head" with other large operators. AT&T Wireless Services Inc., Sprint PCS and Nextel Communications Inc. currently are the only U.S. nationwide terrestrial wireless carriers. The merger, approved last week by VoiceStream and Omnipoint boards, still needs stockholder and regulatory approval. Under the agreement, each Omnipoint stockholder will receive a 0.825 share of VoiceStream and $8 per share; this values Omnipoint stock at about $32 per share. This part of the deal, estimated at $1.7 billion, is based on 53.121 million outstanding shares and last Wednesday's VoiceStream closing stock price of $29.50. In late trading last Thursday, VoiceStream was at $28.50, down $1, and Omnipoint rose nearly $8 to $28.75. In addition, VoiceStream also will assume $2.6 billion in Omnipoint debt and agreed to invest $100 million immediately, with $50 million more due before closing. The glue for the merger is $957 million from international wireless player Hutchison Telecommunications Ltd. of Hong Kong, whose U.S. subsidiary currently holds a 24 percent stake in VoiceStream. Hutchison's infusion will give it 30 percent of the new company. The company also will provide $150 million in interim financing in Omnipoint convertible preferred stock and invest the remainder in the combined firm. "Any time there's an investment put into a North American GSM company, it raises the ability of all GSM companies to build more of their systems sooner," said Jim Murrell, chairman of GSM North America. In the new company, John Stanton will remain in his position as chairman and CEO of Voice-Stream. Omnipoint Chairman and CEO Doug Smith will become vice chairman and continue as chairman of the engineering arm, Omnipoint Technologies. At press time it was unknown whether George Schmitt, CEO of Omnipoint's PCS operations, would stay under the new ownership and, if so, in what role. Most analysts expect the Omnipoint merger will be the first step in consolidating the GSM players. Aerial Communications Inc. is pegged as the next most likely acquisition target, with Powertel Inc. not far behind. Whether other deals transpire is still in question, but VoiceStream has been a darling of Wall Street. It already was highly rated based on its quarterly metrics. For control of their C- and F-Block licenses--which must be majority-owned by an entrepreneurial firm--Cook Inlet and VoiceStream will create a new joint venture. Cook Inlet will hold 50.1 percent and VoiceStream 49.9 percent. The merging companies still have re-auction markets to build out. Bidding under the Cook Inlet/VoiceStream PCS LLC entity, VoiceStream spent $192 million for 28 licenses, including the prized markets of Dallas and Chicago. Omnipoint's bidding party paid $45 million for 34 licenses, which included St. Louis and Detroit. (New Orleans remains as the only major city without a GSM licensee.) The companies weren't saying how branding will work out. Some Omnipoint subscribers would like to see Omnipoint's bird mascot take flight and Voice-Stream's celebrity spokeswoman brought in. Jeff Hines, analyst at Deutsche Banc Alex. Brown: "I think they will kill the parrot and bring in Jamie Lee Curtis."