WASHINGTON-The German government said it will sell its stake in Deutsche Telekom AG, a move that could blunt legislative attempts to prohibit DT’s takeover of VoiceStream Wireless Corp.
Senate Majority Leader Trent Lott (R-Miss.) said last week he opposes legislation that would prohibit U.S. telecom licenses to be transferred to a company that is more than 25-percent owned by a foreign government.
Such legislation, sponsored by Sen. Ernest F. Hollings (D-S.C.), is included in the FCC spending bill. The Hollings bill would increase scrutiny of mergers and close a loophole for the Federal Communications Commission to waive the rules that prohibit mergers with foreign-owned companies if it is in the public interest.
The German government owns 58 percent of DT. That stake will be diluted, but not erased, with the purchase of VoiceStream and Powertel Inc.
Opponents of the legislation have said the 25-percent cap would violate U.S. commitments under the World Trade Organization’s Basic Telecommunications Agreements signed in 1997. European Union representatives have threatened to take legal action against the United States if the legislation is enacted.
It is difficult to read how U.S. wireless players feel about the bill.
Verizon Communications does not oppose the Hollings bill, but said it may need to be modified to be in line with WTO rules, according to Ivan Seidenberg, president and co-chief executive officer.
Carriers competing with a DT/VoiceStream/Powertel combination may not want to support them on the matter. Hollings has said he has quiet support from the wireless industry for his cause. The executive board of the Cellular Telecommunications Industry Association did not discuss the issue at its most recent meeting, even though there had been indications the group would take a position.
It is unclear what chance the legislation has of passing. Lott apparently wants to strip all extraneous measures from appropriations bills as Congress races to fund government spending bills and adjourn. Ironically, Lott is co-sponsoring a stand-alone Hollings bill that would accomplish the same goals.
VoiceStream and DT are not sitting on their laurels waiting for the Congress to decide the matter. Last week, they released letters from the German government promising to reduce its ownership to zero and from U.S. Trade Representative Charlene Barshefsky saying USTR has pressed foreign governments to privatize their state-run telecom companies.
