VoiceStream to purchase MobileStar assets

VoiceStream Wireless has reached agreement with MobileStar to purchase the assets and assume some or all of the contracts of the bankrupt wireless Internet service provider for an undisclosed amount. VoiceStream also agreed to provide MobileStar with a debtor-in-possession loan to keep the troubled company afloat.

MobileStar filed for Chapter 11 protection and fired most of its 90-person staff after running out of cash, according to reports.

Prior to its troubles, MobileStar had carved out a solid niche in the market served by wireless LAN-enabled devices, which made it an attractive acquisition candidate, according to a VoiceStream spokeswoman. One of its highest-profile contracts was a pact to provide wireless connectivity to Starbucks’ coffee shops.

“They will us to offer high-speed data services in high-traffic areas such as hotels, airports and conference centers where they have had some success,” she said.

The spokeswoman added that MobileStar’s network would complement VoiceStream’s network, which is currently GSM-based but is “on the cusp” of transitioning to GPRS.

“We have done a ‘soft’ rollout of GPRS in all of our regions,” she said, adding that a full rollout will happen soon, perhaps before the end of 2001.

Repeated calls to MobileStar for comment were not immediately returned.