Cross border deals: VoiceStream claims stake in Microcell

North America increasingly is becoming one market, some say, and the recent extension of the relationship between VoiceStream and Microcell Telecommunications is evidence of that fact.

Last week, VoiceStream took an interest in Microcell by buying a 15% stake of the outstanding equity securities - more than $274 million worth of Microcell stock. VoiceStream also will appoint two members to Microcell's board of directors.

Initially, the added financing will contribute to the continuing buildout of Microcell's network and the development of its wireless data strategy. Microcell will extend its network across more highways and to reach more weekend destinations and improve its in-building coverage, said Andre Tremblay, chairman, president and CEO of Microcell.

Microcell and VoiceStream also plan to jointly launch a data platform across their networks. That platform will begin with the implementation of global packet radio service and may include third generation services, Tremblay said.

The close relationship between Microcell and VoiceStream will be key to future data services because it ensures that services are compatible and seamless to traveling customers. "We'll define the services that will be transparent to our customers," Tremblay said.

Although Microcell traditionally has worked closely with the GSM community in the U.S. to ensure smooth roaming, this close alliance with VoiceStream allows the two operators' customers to access services in the same manner across the networks. In addition, the operators can extend the same type of pricing for services whether customers are on Microcell'snetwork or VoiceStream's.

The strengthening of the relationship between VoiceStream and Microcell may be indicative of a general trend in the North American market. "Players north and south of the border seem to be teaming up because North America is increasingly a single market," said Lis Angus, executive vice president of Angus Telemanagement Group.

Tremblay expects to see further evolutions of partnerships. In addition to strong relationships between wireless companies, the next phase of consolidation will come from wireless and wireline companies that team, he said. "I wouldn't be surprised down the line to see a third phase of integration that would involve IT-based layers." For example, content or software companies might begin integrating with telecom players.