VoiceStream finalizes merger deal
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Executives from both companies officially announced the merger's closure yesterday at VoiceStream's headquarters in Bellevue.
The price was about $29 billion, $20 billion less than when the deal was first announced and a result of the drop in Deutsche Telekom's stock. Still, it was the most expensive acquisition in Pacific Northwest history, outdistancing Boeing's 1997 $16.3 billion acquisition of McDonnell Douglas.
The merger also signals a thinning of international borders. For the first time, a major U.S. telecommunications company will be owned by a foreign concern. VoiceStream will continue to operate from Bellevue as part of Deutsche Telekom's T-Mobile division.
"What we saw was a chance to change the rules - to become a global business," said John Stanton, chairman and chief executive officer of VoiceStream, who will continue to head the company.
VoiceStream has 5.4 million subscribers, including those that came with the acquisition of West Point, Ga.-based Powertel, a deal that closed Thursday. Combined, T-Mobile now has 51 million subscribers total worldwide.
VoiceStream is a relatively small wireless carrier. Until the formation of Cingular Wireless, it was the only one in the U.S. using global system for mobile (GSM) communications, the main technology used in Europe and by Deutsche Telekom.
To that end, the newly combined company yesterday announced the launch of international, single-rate roaming in the U.S. for European wireless customers; VoiceStream customers will be able to start roaming in Europe this fall.
"We are committed to building a trans-Atlantic mobile communications powerhouse," said Ron Sommer, chairman and chief executive officer of Deutsche Telekom, who was in Bellevue yesterday.
To celebrate the occasion, VoiceStream threw an employee party yesterday and bought employees tickets to Thursday's Mariner game, where Sommer threw the first pitch. Actress Jamie Lee Curtis, VoiceStream's ad spokeswoman, showed up and was presented with a bicycle from Sommer. Deutsche Telekom is sponsoring a cycling team in the Tour de France.
"This is like putting together a team for the Tour de France. We have some Italians, some Germans," Sommer said.
The question of whether the Germans can work with the Americans at VoiceStream has been a concern after the troubled DaimlerChrysler merger led to massive layoffs and billion-dollar losses. Many attributed the problems in that merger to a clash of cultural management styles.
"What was worthwhile in the '60s and '70s ... was to export a concept developed centrally in the headquarters. Companies function totally different today," said Sommer. "We've looked at the issue carefully. John and his team have a lot of fun and we concluded that jointly we'll have more fun. ... "
Because the German government owned a big stake in Deutsche Telekom, U.S. senators strongly opposed the deal. But VoiceStream navigated approval by the Federal Trade Commission, Federal Communications Commission and the U.S. Congress, closing on schedule in the second quarter of this fiscal year.
Sharon Pian Chan can be reached at 206-464-2958 or schan@seattletimes.com.