GSM gains ground with merger

A GSM provider to the western United States, VoiceStream Wireless, opened access to the East coast with its acquisition of Omnipoint Communications last week. The merger also inspired additional financing from Hutchison Telecommunications PCS to the tune of $957 million.

"This agreement was made over a long period of time; the two companies are well-suited for each other," said Terry Phillips, director of external affairs for Omnipoint.

The combined company will provide service to more than 1 million customers. In addition, VoiceStream announced that Cook Inlet Region Inc. will invest in a newly created joint venture, of which 50.1% will be owned by CIRI and 49.9% by VoiceStream. The three transactions are valued at more than $9 billion.

"It is not a surprise and there is more to come," said Iain Gillott, an analyst with IDC. "It is the survival of the [GSM] business; Omnipoint had nothing to help it compete with AT&T or Sprint. There was no leverage point to get good roaming advantages."

After the merger is completed, and with CIRI, the combined venture will have licenses to provide service to more than 175 million people in 17 of the top 25 markets, giving it a competitive edge.

"It is good for business because it gives a bigger footprint on a network with a robust set of services," said Bob Egan, network research director with The Gartner Group.

Following the merger, VoiceStream will be the largest GSM operator in the United States.

"This deal puts to rest speculation that GSM is not a serious technology," said Phillips. "There is no reason to question it; this is a victory for GSM."