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. Last Updated: 07/27/2016

VoiceStream Agrees to $50.7Bln Deal

NEW YORK -- VoiceStream Wireless Corp. on Sunday agreed to a $50.7 billion cash-and-stock takeover by Deutsche Telekom AG in a move that will give the money-losing wireless firm cash to buy new telephone licenses.

The deal will also provide the German company with a foothold in the United States.

VoiceStream, one of the last independent U.S. wireless companies, has licenses across the U.S. and uses a technology similar to the GSM European mobile standard. Founded in 1994, VoiceStream has 3 million subscribers and 8,200 employees.

The deal is expected to face scrutiny in the U.S. Congress, where many legislators are concerned about the 59-percent stake the German government holds in Deutsche Telekom. Under terms announced early Monday, Deutsche Telekom said Germany's ownership would shrink to 45 percent.

Federal Communications Commission chairman William Kennard said Thursday that his agency would "carefully scrutinize" any proposed acquisition of a U.S. telecommunications firm by a government-controlled foreign telephone company.

A U.S. law prohibits the acquisition of a U.S. telephone company by any firm more than 25 percent owned by a foreign government. But the law gives regulators discretion to waive that limitation if a deal is deemed to be in the public interest.

If the sale is blocked by the U.S. Congress, Willy Helin, spokesman for the European Union delegation in Washington, said the United States would be in violation of WTO rules.

Helin said the EU would then send a letter to U.S. Trade Representative Charlene Barshefsky, probably Monday, warning that the legislation sponsored by Senator Fritz Hollings would violate a 1997 WTO agreement on telecoms.

If the legislation becomes law, Helin said, the EU could bring a case against the United States at the Geneva-based WTO.

Deutsche Telekom will pay 3.2 shares of its stock, plus $30 cash, for each VoiceStream share. Deutsche Telekom will also assume $5 billion in VoiceStream debt, the companies said.

Under the complicated two-step deal, which was widely expected, Deutsche Telekom will make a separate $5 billion cash investment in VoiceStream. The German company will receive preferred stock convertible into common stock at $160 per share.

Deutsche Telekom has made no secret of its desire to enter the United States f the world's largest telecoms market. While the company has a war chest of 100 billion euros ($92 billion) to finance its assault, it may be thwarted in its expansion drive by U.S. regulators.

Finnish telecom operator Sonera said Monday it would sell its 7.9 percent stake in VoiceStream to Deutsche Telekom for $3.7 billion.

Sonera said it would pay in both cash and shares for the VoiceStream stake.

It said it would receive $569 million in cash and 60.7 million Deutsche Telekom shares for a 1.7 percent stake.

"The fact that we are selling our VoiceStream shares will not affect our service operations strategy in the United States, ? a major market for Sonera's developing service and technology businesses, both because of its size and potential for large numbers of transactions per subscriber," said Sonera's Deputy Chief Executive Kaj-Erik Relander in a statement.

VoiceStream said earlier that more than half its owners had agreed to Deutsche Telekom's bid, worth some $50.7 billion.

After the sale, Sonera's sole U.S. holding will be its 11.8 percent stake in U.S. operator Powertel, which operates in 12 Southeastern states.