Deutsche Telekom Buys California And Nevada Mobile Networks From Cingular

The $2.3 billion deal will end a joint venture between the two companies.

InformationWeek Staff, Contributor

May 25, 2004

1 Min Read

BERLIN (AP) -- Deutsche Telekom is paying $2.3 billion to end a joint venture with the U.S. wireless concern Cingular Wireless and purchase Cingular's mobile phone network in California and Nevada.

The agreement announced Tuesday would unwind a joint venture established in 2001, under which Deutsche Telekom's T-Mobile USA customers phoned over the Cingular network in California and Nevada and Cingular's customers used the T-Mobile USA network in New York.

"Deutsche Telekom will further strengthen its presence and growth potential in the United States," the Bonn-based firm, Europe's biggest telecommunications company, said in a statement.

Deutsche Telekom bought American company VoiceStream, now renamed T-Mobile USA, during the technology boom. T-Mobile USA passed Nextel Communications Inc. to become the fifth-largest U.S. wireless company last year.

Deutsche Telekom said the $2.5 billion purchase price of the network in California and Nevada will be offset by a $200 million payment related to the unwinding of the joint venture. T-Mobile will make a cash payment to Cingular of some $2.3 billion.

The deal likely will close at the beginning of 2005, Deutsche Telekom said.

It is subject to U.S. antitrust authorities' approval of Atlanta-based Cingular's pending $41 billion acquisition of AT&T Wireless Services Inc. That deal would make Cingular the largest U.S. cell phone provider with 46 million customers. Cingular is a joint venture of Atlanta-based BellSouth Corp. and San Antonio-based SBC Communications Inc.

In addition to the network sale, Cingular will buy from T-Mobile network capacity worth at least $1.2 billion over a maximum four years "to ensure the orderly migration of Cingular's customers in California, Nevada and New York over time to the network they will acquire from AT&T Wireless," Deutsche Telekom said.

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