The Wall Street Journal is reporting that the FCC has sent a letter of inquiry to T-Mobile USA regarding the German parent conglomerate Deutsche Telekom and its 30% stake in the aforementioned carrier. Â Under current regulations, foreign corporate entities cannot own more than 20% of an American company controlling a common carrier license for wireless service.
The purchase of VoiceStream Communications by Deutsche Telekom was transacted in 2001 under more lax regulations, which led to the letter being sent in the wake of the Verizon-Alltel merger approval by the Department of Justice. Â T-Mobile has 30 days to respond to the letter, and the carrier is exploring options to come into compliance with the requirement.
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I wonder if a merger…?
What do you mean a merger? They are already together.
I think Phoneslinger may be referring to the potential merger of T-Mobile and Sprint. That could easily cut DT’s equity stake to 20%, in-line with federal mandate.
However, I think in the short run, DT will dispute the matter, and ultimately spin off stake in the company. I suspect they will try to do so, by setting up a non-controlling subsidiary, which would hold the excess stake.
In light of the circumstances, what are the probabilities of DT purchasing Sprint now ?? Personally, I never thought it would be allowed by the antitrust regulators anyway.
DT Could not purchase Sprint, that would increase their 30%. They could merge, which would value Sprint at more than 50% of T-Mobile lowering DT’s ownership by more than 50%. However this is unlikely, this would put them over spectrum caps and Sprint is fully familiar with how mergers can go wrong.
Most importantly. How does this make any sense at all. Vodaphone owns 45% of Verizon Wireless last I checked. That is more than 20% and they are foreign???
Vodafone own the 45% through a holding company, but is otherwise a minority investor with Verizon Communications in direct control with majority ownership. Deutsche Telekom purchased VoiceStream outright and turned the company into a subsidiary of the conglomerate. This is where the issue comes from.
A Sprint/T-Mobile merger doesn’t make sense either….Why would a company that utilizes CDMA & iDen technology (Sprint) merge with a company that runs on GSM (T-Mobile)?!!
Well said Lisa, it wouldn’t make any sense at all. By all intents and purposes it looks as though Sprint is going to go it alone. Unless Google or Comcast(both american companies) steps up with a bid………..
I wouldn’t be surprised for the latter to do so once Clearwire is up and running successfully.