RealTime IT News

VoiceStream: Getting Married Soon?

When I traveled to Europe last week, my cell phone was completely useless. It uses the PCS standard, whereas Europe uses GSM. In fact, most of the world uses GSM.

Interestingly enough, there is a US wireless company called VoiceStream that uses the GSM standard. With the rapid consolidation of the wireless industry, VoiceStream would be an attractive buyout candidate for foreign wireless companies.

But like any good wireless company VoiceStream is not waiting to be purchased; rather, the company is buying other companies, so as to scale.

One deal was the purchase of Omnipoint, a leading provider of GSM services in the US. With this deal, VoiceStream also got an investment of $957 million from Hutchison Telcom PCS Limited and Sonera for $500 million. Another key deal for VoiceStream was the purchase of Aerial Communications. Of course, this company is also a leader in GSM.

VoiceStream is still a small player in the land of the telecom giants. Such companies as AT&T Wireless, Sprint and Verizon have much more customers. However, with the recent acquisitions, VoiceStream has been able to build a nice customer base. There are about 1.8 million subscribers (of these, 1.3 million are on a monthly plan and 500,000 are prepaid). The growth in customers amounted to a 334% increase from the end of the first quarter of 1999. As for revenues, these were $170.8 million in the past quarter, which was up 220.7% from the same quarter a year ago. Net losses are large, which were about $203 million in the last quarter. But the company has a hefty cash position and is using its money wisely to build its infrastructure and customer base.

Even with the NASDAQ plunge, shares of Voicestream have not plunged. Currently, the company has a market capitalization of $24 billion. Yes, this is a big number. Then again, the crazy, high-stakes world of telecom has enough room to put the company "in play." Companies like Deutsche Telekom, Nippon Telegraph & Telephone and perhaps even WorlCom could be suiters.