Deutsche Telekom AG's (DT) acquisition of U.S. wireless operators VoiceStream Wireless Corp. and Powertel Inc. becomes final Thursday, as the German telecommunication giant issues new shares to pay for the takeover.
DT's board has approved the issuance of more than 1 million new shares, raising its capitalization from 7.8 billion euros (US$6.7 billion) to 10.7 billion euros, the company said in a statement Thursday. The new shares will be traded on the Frankfurt exchange and other stock markets beginning June 4.
In addition, DT is making cash payments totalling $4.2 billion to former VoiceStream shareholders, based on the takeover agreement signed last July, which set a price of 3.2 DT shares and $30 cash for each VoiceStream share.
DT has been touting the benefits for users of a transatlantic GSM (Global System for Mobile communications) operation. GSM is the most widely used wireless system in Europe, but is still relatively rare in the U.S. Though VoiceStream is one of the major providers of GSM service in the U.S., users still need to buy a special handset in order to roam between North America and Europe.
DT chairman Ron Sommer found himself defending the high cost of the deal at the company's annual meeting Tuesday. He told shareholders that the company's persistently low share price is "unsatisfactory," but added, "I am firmly convinced that we will see a turnaround as soon as the general market sentiment improves. The fundamentals all point clearly towards a much higher share price than our current market value," according to a transcript of his remarks.
The company's shares (DTE.FRA) remain at their lowest level in nearly two years, closing Wednesday at 23.68 euros, but gained some ground in Thursday morning trading, to 24.35 euros.