NEW YORK-AT&T Wireless Services Inc. and VoiceStream Wireless Corp. are in preliminary talks to merge their wireless operations, which would create the nation’s second-largest wireless carrier, according to a Wall Street Journal report. A merged company would combine the country’s third- and sixth-largest nationwide carriers and serve more than 25 million customers.
The story, citing people close to the talks, said the deal could be worth $10 billion with VoiceStream ending up as the majority shareholder of the combined company. Both Deutsche Telekom and AT&T Wireless had no comment on the merger possibility.
Both carriers have been involved in a number of consolidation rumors with fellow GSM carrier Cingular Wireless, including speculation of a Cingular-AT&T Wireless merger and a Cingular-VoiceStream merger. Some analysts have noted the latter would be the most likely possibility because VoiceStream needs Cingular’s customer base and Cingular needs VoiceStream spectrum. AT&T Wireless is seen as the least likely to need a merger since it has a relatively strong and healthy customer base and one of the best spectrum positions of the nationwide operators.
Speculation surrounding VoiceStream’s future has percolated recently with parent company Deutsche Telekom’s top executive Ron Sommer reportedly being pressured to resign after losing support from both the company’s board of directors and the German government, which is DT’s largest shareholder. Under Sommer’s leadership, DT share price has lost 90 percent of its value since March 2000 and the company currently is saddled with more than $66 billion in debt due to a number of costly acquisition, including DT’s $30 billion purchase of VoiceStream.
Deutsche Telekom’s board of directors is expected to meet next week to decide the future of Sommer.
