Deutsche Telekom AG to buy VoiceStream Wireless Corp. for 106.20 times revenue

Weekly Corporate Growth Report, Jul 31, 2000

The Deal: The VoiceStream Wireless Corp. approved Deutsche Telekom AG's stock-and-cash bid of $50.5 billion. The transaction also requires Deutsche Telekom to assume $5 billion of VoiceStream debt. The new company would have licenses to operate wireless networks that span from some of Europe's top markets to markets in the United States such as New York and California. The deal will create the world's first wireless competitor that operates in both North America and Europe using a common digital standard called Global System for Mobile Communications. This system will create a medium for cell-phone customers to communicate globally using one phone.

Discussion: VoiceStream Wireless Corp. has expanded with the acquisitions of Omnipoint and Aerial Communications. VoiceStream provides digital PCS to more than 2.3 million customers on its global system for mobile communications networks (GSM). VoiceStream has licenses in 23 of the top 25 US markets. Some of the licenses are owned by a joint venture between VoiceStream and Cook Inlet Region. Customers can also access the Internet with their phones using VoiceStream's portal.

Deutsche Telekom AG is the no. I telecommunications fine in Europe and no. 3 in the world, behind NTT and AT&T. The company is still Germany's no. I fixed-line phone operator, with more than 48 million lines. Its rapidly expanding TMobile International unit serves more than 18 million wireless phone customers in Europe, including about 13 million in Germany.