Voicestream approval for Telekom

Telekom needs to reduce its debts

The German telecoms giant Deutsche Telekom's planned $26bn acquisition of US operator Voicestream Wireless, the sixth largest mobile phone firm in the US, was approved by the communications regulator on Wednesday.

The US Federal Communications Commission granted the permission despite concerns raised by some US lawmakers about the implications the deal might have on US national security.

The worries arose in part because the German government owns 44% of Deutsche Telekom.

Competition concerns were also raised.

But the deal has previously been cleared by US anti-trust authorities and the Federal Bureau of Investigation

Earlier this year, Deutsche Telekom announced plans to complete the deal by the middle of this year.

Critical analysts

Many analysts have been sceptical about the deal, with some even recommending that Deutsche Telekom should ditch Voicestream.

Deutsche could be better off building a more commanding presence in Europe, where it has only acquired new, third-generation mobile phone licences in Germany, the UK and the Netherlands, some analysts have argued.

Weak market sentiment also places a question mark over Telekom's plans to float its wireless unit T-Mobile later this year.

The flotation forms an important part of the company's plan to reduce debt built up acquiring third-generation mobile phone licences.

The company has said it wants to halve its debts to less than 30bn euros by the end of the year.

Widening losses

Voicestream's losses are also sizeable at more than $800m during 2000, compared to just $151.7m the previous year.

Revenue however tripled, and the US firm gained 602,000 new subscribers in the last three months of 2000.

The increase in revenue but widening losses demonstrates the extent of the debt being absorbed by mobile phone companies which bid to operate third generation licences.