SunCom, T-Mobile USA Agree to Tie The Knot

Deutsche Telekom, the parent company of T-Mobile USA, said Monday it had agreed to acquire Southeastern US carrier SunCom for $1.6 billion USD in cash.

The deal, announced Monday, is still subject to regulatory approval. It is guaranteed to have shareholder approval however, the two companies said, due to the fact that two investment companies owning more than 50 percent of the stock in the company have committed to vote in favor.

Following the transaction's close in the first half of 2008, SunCom's customers and network would be integrated fully into the network. T-Mobile also gains some coverage area, mostly in the Southeast, and its network will then be available to about 259 million US residents in total.

SunCom owns and operates networks in North Carolina, South Carolina, Tennessee, Georgia, Puerto Rico and the U.S. Virgin Islands. As of the end of the second quarter it had about 1.1 million customers, with $242.5 million in revenue.

"The strategic fit of the SunCom operations will make this a near-perfect acquisition." T-Mobile USA president and CEO Robert Dotson said. "It will round out our domestic footprint, allowing us to serve 98 of the top 100 markets, and will significantly benefit our financial position by reducing roaming expense."

Roaming expenses have been an issue for T-Mobile USA, as it lags far behind its competitors in available spectrum. While it came out a big winner in last year's auctions, the company still has quite a bit of catching up to do.

As of the end of the second quarter, the company had about 27 million customers, placing it fourth among the major US wireless carriers.

It is likely that SunCom will not be T-Mobile USA's last acquisition. In March, Deustche Telekom CEO Rene Obermann said that the company planned to make acquisitions in the mobile phone sector. Several regional GSM carriers other than SunCom remain, although with the rash of consolidation recently, they are beginning to become somewhat of a rarity.