VoiceStream Tops 8M Subscribers

As it confronts a crowded wireless market nearing saturation,
VoiceStream reported it added over a half million subscribers in the second
quarter, bumping its customer base over 8 million.

VoiceStream, which is being re-branded T-Mobile by its parent Deutsche
Telekom , added 525,900 subscribers in the second quarter,
bringing its total number of customers to 8 million. VoiceStream is the
sixth largest carrier in the nation, with a subscriber base a little more
than a quarter of top carrier Verizon Wireless’.

VoiceStream had 646,700 contract net additions in the quarter, up 16 percent
from last quarter. Of its subscriber base additions, 73,200 came through
acquisitions. The carrier also reported a slightly lower contract churn
rate, which dropped from 2.7 percent to 2.5 percent. Average revenue per
user increased slightly, too, from $51 a month to $52.

Deutsche Telekom shelled out $31 billion to buy VoiceStream in July 2000,
during the heyday of the wireless industry. Shareholders later criticized by
the high price paid for the deal, engineered by Deutsche Telekom chief Ron
Sommer, after prospects for the wireless sector turned sour. Sommer was
eventually forced out as CEO last month.

New Deutsche Telekom CEO Helmut Sihler is reportedly mulling possible combinations with either At&T Wireless or Cingular Wireless.

The elbow-to-elbow wireless sector has been the subject to a swirl of
consolidation rumors this summer, especially involving second-tier carriers
like VoiceStream. The Wall Street Journal reported last moth that
VoiceStream and AT&T Wireless had begun talks on a $10 billion merger to
create a combined carrier with 25 million subscribers.

Today, the New York Post reported Deutsche Telekom has hired Goldman, Sachs, J.P. Morgan Chase, and Deutsche Bank to look into strategic opportunities, including a merger.

With over half of all American already owning a cell phone and the U.S.
wireless market crowded with six national carriers and a slew of regional
competitors, wireless carriers have struggled to keep up with the frenetic
growth they enjoyed in years past.

Last month, AT&T Wireless, the No. 3 carrier, fell short of its expected
subscriber growth, adding 417,000 customers to bring its subscriber base to
just shy of 20 million. The company cited softness in the wireless market,
in addition to the loss of customers from wholesale partner WorldCom’s
decision to get out of the wireless business as part of its reorganization
plan.

Earlier in July, Sprint PCS, the No. 4 carrier, announced sluggish
subscriber growth, adding 308,000 subscribers. The company expressed caution
that it would reach its year-end goal of adding 2.5 million to 2.7 million
new customers.

Meanwhile, Verizon Wireless, the top carrier, continued to lengthen its lead
in subscriber base, adding 723,000 subscribers in the quarter to top 30.3
million.