T-Mobile to Buy SunCom Wireless For $1.6 Billion and Debt

FRANKFURT -- Deutsche Telekom AG said its T-Mobile unit in the U.S. is to acquire all outstanding shares of U.S. mobile-phone company SunCom Wireless Holdings Inc. for $2.4 billion including debt. Deutsche Telekom said it will buy the outstanding shares for $1.6 billion and take over net debt of $800 million.

Deutsche Telekom, which is based in Bonn, Germany, said it expects the deal to create synergies of around $1 billion, mainly through the reduction of roaming fees and operating costs.

Since 2004, T-Mobile U.S. has had a roaming agreement with SunCom Wireless, which had around 1.1 million customers at midyear, mainly in South Carolina, North Carolina, Tennessee, Georgia, Puerto Rico and the Virgin Islands. Deutsche Telekom said the deal will further its strategy of growing in the markets where it is already present.

With almost 27 million customers, the U.S. mobile network market provides most of the company's mobile network profits and is the only positive revenue source for Deutsche Telekom as a whole. The acquisition allows T-Mobile U.S. to increase its network coverage capacity by 15 million potential users to 259 million in 98 of the U.S.'s 100 most important regional markets, Deutsche Telekom said.

T-Mobile U.S. came into being in 2001 with the acquisition of mobile-phone-network operators VoiceStream and Powertel for around $39 billion ($48.04 billion). Deutsche Telekom Chief Executive Rene Obermann said in March that the company intends to continue expanding its mobile network business, particularly in existing markets, and the purchase of SunCom reflects the implementation of this strategy.

SunCom booked sales of $242.5 million in the first half, up from $206.7 million in the same period a year ago. In terms of operating results, the company booked $31 million in the first half of 2007 compared with a loss of $181 million the previous year. According to the deal, SunCom shareholders will receive $27 per share, a premium of 22.7% to the closing price of the share on Friday. Deutsche Telekom said it expects the deal to close in the first half of 2008, provided it gets the necessary antitrust approval from the U.S. authorities.

The German telecommunications giant added that more than 50% of SunCom's shareholders have already given their consent to the deal. Deutsche Telekom's shares opened flat at Euro 13.67 on news of the acquisition, later dropping 0.1% against a lower overall market.