Re: Mobile Wireless- USA GSM Refuses to Give up / DT to buy VoiceStream
Thread- A few years back, I used to think any SP that was building a network based on GSM was crazy. But that's before I had realized how CDMA clouded my view of the world. Obviously this move gives more credibility to the GPRS-EDGE-3G evolution to broadband mobile wireless. -MikeM(From Florida)
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Deutsche Telekom Offers to Buy VoiceStream, FT Says
By Malcolm Fried
Bonn, Germany, July 11-- Deutsche Telekom AG offered to buy VoiceStream Wireless Corp. for more than $30 billion, the Financial Times online edition said, sending VoiceStream shares as much as 13 percent higher in U.S. after- hours trading.
Telekom, Europe's biggest phone company, offered to acquire all of VoiceStream's shares or a controlling stake, the paper said without citing sources. Telekom Chairman Ron Sommer has been under pressure to make a large acquisition, and has raised more than $96 billion through new shares and bond sales to finance a purchase in the U.S., the largest communications market.
Buying Bellevue, Washington-based VoiceStream would give Deutsche Telekom a nationwide U.S. wireless network using the global system for mobile communications, or GSM, digital standard. GSM is the technology Deutsche Telekom uses in its own European networks, and it's also dominant in Asia.
"A Deutsche Telekom-VoiceStream combination would be fantastic," said Kevin Roe, an ABN Amro Inc. analyst who rates VoiceStream- buy. "VoiceStream is the premier consolidation candidate for a European operator in the U.S. for three reasons. One, they're nationwide. Two, they're spectrum-rich. And three, they're GSM."
Hutchison Whampoa Ltd., a conglomerate controlled by Hong Kong tycoon Li Ka-shing, invested $957 million in VoiceStream last year and held about 26 percent of the outstanding shares in February, according to Bloomberg data. Officials at Hutchison, VoiceStream's biggest shareholder, weren't available for comment.
The Hong Kong company made a $7.5 billion profit selling control of Orange Plc, a U.K.-based mobile phone operator, to Germany's Mannesmann AG last year. It was part of a group that paid $6.6 billion for a license to offer wireless high-speed Internet access in Britain in April.
Telephone and Data Systems Inc., the former parent of Aerial, owned about 17 percent, also as of May. Sonera Oyj, the Finnish telephone company, owned about 8.9 percent as of May.
Bargaining Power
Acquiring VoiceStream would help Deutsche Telekom get greater discounts on equipment purchases, including handsets for customers and switches and other gear required to build and improve mobile networks, Roe said.
Bonn-based Deutsche Telekom and VoiceStream declined to comment. Deutsche Telekom American depositary receipts rose 211/256 to 58 115/256. VoiceStream fell 15/16 to 124 15/16 in U.S. trading, but surged to as high as 141 in trading on electronic networks after the FT online report appeared.
Telekom could also be a suitor for Sprint Corp. should Sprint's agreement to be bought by WorldCom Inc. unravel amid regulatory opposition, analysts and investors said. Telekom, which already owns 10 percent of Sprint, has also been seen as a suitor for Cable & Wireless Plc. It tried to buy Qwest Communications International Inc. in March, before Qwest completed its purchase of U S West Inc., people familiar with the companies said then.
"If Deutsche Telekom has made an offer for VoiceStream, then I don't think that they would be going after Sprint," said Peter Friedland, an analyst at WR Hambrecht & Co. in San Francisco who rates VoiceStream- buy. That's because VoiceStream and Sprint's wireless business, Sprint PCS, are redundant, and Deutsche Telekom would have to shed one.
National Network
Friedland said a bid for VoiceStream wouldn't necessarily rule out a bid for Qwest as well. "They could cobble Qwest and VoiceStream together," he said, to create a company with national data and wireless networks and local phone lines in 14 states.
Analysts and investors have speculated that WorldCom and Sprint will call off their combination this week. They have also said WorldCom, which wanted Sprint mainly for its national mobile- phone network, Sprint PCS, could pursue VoiceStream if it decided it still wanted to own a wireless network.
VoiceStream and Nextel Communications Inc. are the only two nationwide U.S. wireless carriers without ties to large wired phone companies. Because VoiceStream uses GSM and Nextel uses Motorola Inc.'s integrated digital enhanced network, or iDEN, which is compatible with GSM, customers of each company can buy phones that work with a single number worldwide.
"I love VoiceStream as a standalone entity, but the backing of a global powerhouse like Deutsche Telekom would make VoiceStream even better," ABN Amro's Roe said.
VoiceStream has been publicly traded since May 1999, when it was spun out of Western Wireless Corp. In that time, it's risen more than sixfold. VoiceStream Chairman John Stanton, a former top executive at McCaw Cellular Communications, used the shares to acquire rivals Omnipoint Corp. in February and Aerial Communications Inc. in May. |
