A report in The Wall Street Journal has suggested that the USA based, VoiceStream has re-ignited merger talks with its rival, Cingular Wireless. The paper said that VoiceStream has not totally ended earlier talks with AT&T Wireless, which has apparently broken down over management control of the merged entity.
A combined, Cingular-VoiceStream network would become the country's second largest mobile phone network by subscriber numbers, having 30.2 million customers, a shade behind Verizon Wireless's 30.3 million subscribers.
Cingular and VoiceStream are already sharing their infrastructure in California and New York and have also entered into a joint agreement to expand their infrastructure, sharing the cost of building sections of their network. The deal could falter on how the companies share their management control of the company. The WSJ reports that VoiceStream's plan would give it equal voting rights with Cingular's parent companies, SBC and BellSouth, splitting the voting shares into three. This would weaken each of Cingular's shareholders as a two way split would leave Cingular with management control of the merged entity.
A merger will also not make any impact on VoiceStream's parent company Deutsche Telekom's substantial debt pile, which the company is desperate to reduce. There have also been some rumours that SBC is interested in selling part or all of its stake in Cingular. It would probably be easier for SBC to float off some of its holding following a merger as the reduction in competition should improve the values of all US wireless networks. Such a plan may also enable Deutsche Telekom to raise some much needed cash by selling part of its stake in a joint IPO.'"
Posted to the site on 19th August 2002
Posted to: www.cellular-news.com/story/7407.php