Deutsche Telekom May Own Too Much Of T-Mobile - InformationWeek
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10/31/2008
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Deutsche Telekom May Own Too Much Of T-Mobile

While reviewing the Verizon acquisition of Alltel, the FCC revealed that Deutsch Telekom may violate the 20% voting stock threshold.

The Federal Communications Commission said T-Mobile USA may have too much foreign ownership.

The FCC sent a letter to T-Mobile Oct. 17 that said Deutsche Telekom AG's has too large a block of voting stock in the fourth-largest U.S. wireless carrier.

"T-Mobile USA's level of foreign ownership through the existing ownership structure appears to be in violation" of the 20% limit, according to a letter obtained by The Wall Street Journal.

"The commission strictly applies the 20% statutory benchmark of [the law], and has no discretion to waive it. Based on this ownership structure it appears that Deutsche Telekom, a foreign corporation, has a 30%, noncontrolling interest in a common carrier license."

T-Mobile was given 30 days from the date of the letter for a response about compliance. The wireless carrier hasn't officially responded to the government agency's inquiry, but the issue could be resolved with a potential restructuring.

The issue reportedly came up as the Department of Justice was reviewing the Verizon Wireless acquisition of Alltel. The foreign ownership question came up because Verizon Wireless is a joint venture between Verizon Communications and the British Vodafone Group, which holds a minority stake.

The $28 billion deal has been approved by the Department of Justice with the provision that the new company divests itself of 100 markets in 22 states. After the merger, Verizon is expected to become the largest U.S. wireless carrier, with more than 80 million subscribers. AT&T is currently the largest mobile operator, with about 75 million customers.

The Verizon acquisition of Alltel now needs to be approved by the FCC, and the agency is expected to vote on it Nov. 4.

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