Germany to cut Telekom stake

The purchase of Voicestream gives DT a foothold in the US market

The German government has promised to reduce its stake in Deutsche Telekom, as part of an effort to secure US approval of its takeover of telecoms company Voicestream.

The government indirectly holds a 58% in the telecoms giant, while its direct stake is 43.2%. Once Deutsche Telekom has bought Voicestream, the government plans to sell about 10% of this direct stake.

The German government's holding in Deutsche Telekom has raised the hackles of US legislators, who have questioned the impact of the takeover on national security and competition.

The takeover has still to secure approval from the Federal Communications Commission, which has the right to block it because more than 25% of Deutsche Telekom is owned by a foreign government.

Telecoms superpower

Deutsche Telekom announced in July that it was to buy the US mobile phone company for $50.7bn (£33.4bn), in a move which created a new global telecoms superpower.

If approved, the combined company would be worth about $205bn.

The deal gives the telecoms giant - hit by competition in its domestic market - a much-needed foothold in the US market.

"The federal government herewith once again reaffirms its determination to make the formerly state-owned company DT into a company managed on entirely market-economy lines and privately owned," Michael Steiner, foreign policy and security adviser to German chancellor Gerhard Schroeder, said in a letter to the US National Security Adviser Samuel Berger last week,

Separately, US Trade Representative Charlene Barshefsky said in a recent letter to Congress that more would be done to urge foreign companies to sell off stakes they hold in telecoms companies.

"The administration intends to continue and intensify its efforts, including in the WTO and other fora, to encourage our trading partners to privatise their telecom incumbents as expeditiously as possible," she said.