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Deutsche Telekom AG acknowledged its purchase of VoiceStream Wireless Corp. could complicate plans to float its mobile division T-Mobile. A Deutsche Telekom spokesman said a law firm had been hired to “check the legal status” of the IPO in light of its $47.46 billion offer for VoiceStream, the Bellevue, Wash.-based mobile operator. He said the firm was looking into what information about the U.S. company it would have to include in the T-Mobile IPO prospectus. He declined to name the law firm. The spokesman added the float of around 10% of the wireless unit was still planned for October, although the Deutsche Telekom supervisory board would make a final decision by the end of August. He said Deutsche Telekom planned to incorporate VoiceStream into T-Mobile after its acquisition of the U.S. company is finalized in six to nine months. However, some analysts believe the addition of VoiceStream to Deutsche Telekom’s existing European mobile assets threatens to undermine the T-Mobile IPO. “The floatation could become increasingly messy and complicated,” said a telecom analyst who asked not to be identified. “It makes mores sense if T-Mobile is floated post completion of VoiceStream because then investors know exactly what they’re getting.” The analyst said potential investors in T-Mobile might be put off by the prospect of VoiceStream becoming part of the mobile group at a later date. In addition, rolling VoiceStream into T-Mobile could introduce an element of uncertainty into the IPO, given the regulatory hurdles the deal must still clear, he said. What’s more, the analyst noted, such a move could involve significant transfer costs that might be difficult to estimate ahead of time. “If VoiceStream overshadowed an IPO, it would make more sense to wait,” agreed Dennis Gross, telecom analyst at London’s Williams de Broe. However, Deutsche Telekom could find itself wedged between a rock and a hard place. With a raft of mobile IPOs set to launch over the next six to 12 months, the German operator is under pressure to go ahead with the T-Mobile offering on schedule and cash in on being one of the first. Although Dutch operator Royal KPN NV has postponed the float of its KPN Mobile unit until next year, Spain’s Telefonica Moviles and France Telecom SA’s Orange are likely to seek listings this year. Meanwhile, British Telecommunications plc has also been reported as considering a float of its BT Cellnet subsidiary next year. Kevin Fogarty, telecom analyst at Daiwa Europe, said the market would take a dim view of any delay in the listing of T-Mobile. “With a competing group of issuers, if you come to market earlier, you have a competitive advantage,” Fogarty said. T-Mobile has a better chance of attracting investors if it comes to market ahead of its rivals, he explained. In addition, Fogarty said, T-Mobile’s float is vital because it will allow the company to generate its own shares for use in funding future acquisitions. Analysts estimate that T-Mobile without VoiceStream could be worth 70 billion to 80 billion euros ($65.7 billion to $75 billion). Copyright �2000 TDD, LLC. All rights reserved.

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