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Deutsche Telekom to Buy Voicestream Pending FCC Approval

Reports this morning indicate that VoiceStream Wireless Corporation has agreed to be acquired by Deutsche Telekom (NYT: registration required) for $50.8 billion pending the approval of the U.S. Federal Communications Commission (FCC).

Who is VoiceStream? It's an acquisition vehicle that was created to unite most of the GSM-based cellular telephone systems in the United States. A former McCaw executive named John Stanton founded it in 1995 as a spin-off from Western Wireless that focused on digital mobile communications. They bought Omnipoint and Aerial along the way to assembling a national footprint. Hutchison Whampoa and Sonera invested before most people had ever heard of the company.

This will be a merger to die for if you are a Washington lobbyist. Congress and the FCC are very hesitant to let a company that is largely owned by a foreign government (Telekom) acquire a potentially large national communications company. If this deal goes through, however, it would apparently dilute the German government stake in Deutsche Telekom to less than 50 percent.

The New York Times says that Reed Hunt, ex-chairman of the FCC and current consultant for McKinsey, predicts that the deal will not receive approval of all the constituencies in the U.S. Government that will claim jurisdiction unless the German government reduces its stake in Telekom to 25 percent. Perhaps they could merge with the U.S. Postal Service instead?

Think of the possibilities...

  • Lance Armstrong and Jan Ulrich on the same cycling team
  • Monopoly profits for both governments to further reduce their long-term debts
  • A new era in customer service
  • A pink and black eagle

... uh, we don't think so....

What will happen, however, is that this will put further pressure on AT&T Wireless Services and other telecommunications companies with international ambitions to make acquisitions and network infrastructure investments that permit worldwide use of the same mobile phones. This was one of the things that made VoiceStream such a great candidate for Telekom in the first place.

Congratulations to folks like Richard Ziegler who had the foresight to get an account on Omnipoint before it became fashionable to roam from the U.S. to Europe with the same phone. Did they give you stock options when you opened your account? We should all be so lucky....

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CTDATA Venutures (CTDATA) develops Internet and Intranet applications for corporations and non profit organizations. Our services include:

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