Telekom pays $5.9bn for US firm

Deutsche Telekom is expanding its US interests

Deutsche Telekom has followed up its $50bn purchase of mobile phone giant VoiceStream, by agreeing to pay $5.89bn for another US firm, Powertel.

The deal gives the German telecoms firm increased mobile coverage in the souteastern US.

Powertel, which is based in Atlanta, Georgia, provides wireless services to major markets in Florida, Tennessee, Alabama and Mississippi.

The Powertel deal would be completed as soon as the acquisition of Voicestream was completed, it said.

The deal sees Finnish telecoms firm Sonera cashing in one of its foreign holdings to help it fund the cost of its German third-generation licence bid.

Sonera has to find about 3.6 billion euros ($3.26bn) to finance its share of the UMTS licence cost.

It will sell its stake in US operator Powertel to the Voicestream/Deutsche Telekom group for $786 million in Deutsche Telekom shares.

In July Sonera agreed to sell its stake in US operator Voicestream to Telekom for $3.7bn in cash and shares.

Deutsche Telekom shares, which have fallen recently following a string of big investments ranging from Voicestream to third generation mobile phone licences, were up 1.5% at 44.99 euros.

But some analysts believe that Deutsche Telekom needs to concentrate its fire on Europe, where the bidding for new mobile phone licenses in France and Italy is now underway.