FCC Says Deutsche Telekom Owns Too Much Of T-Mobile USA

Deutsche Telekom (NYSE: DT) may own too much of T-Mobile USA, according to a federal regulator who was quoting a rule that bars foreign companies from owning more than a 20 percent stake. “T-Mobile USA’s level of foreign ownership through the existing ownership structure appears to be in violation” of federal law, the FCC wrote in a letter dated Oct. 17 to T-Mobile USA. The letter was obtained by both Reuters and The Wall Street Journal. Even though DT bought T-Mobile back in 2001, it’s ownership stake was apparently revisited as Verizon Communications (NYSE: VZ), which is partly owned by Vodafone (NYSE: VOD), seeks approval to buy Alltel (NYSE: AT). T-Mobile has disputed the claim, and Reuters said they were in talks to find a regulatory fix. Kathleen Ham, T-Mobile’s VP of regulatory affairs said: “We’re perplexed by this.” In explanation, the FCC said T-Mobile had agreed to create a rural subsidiary called Wireless Alliance, which would be jointly owned by Verizon Wireless, in order to comply with the law, however, the FCC charged T-Mobile never properly created the structure.

Meanwhile, the Department of Justice has approved the $28.1 billion merger between Verizon Wireless and Alltel, as long as the combined company divests radio spectrum in 100 markets in 22 states where the two companies overlap, according to the Washington Post. The FCC will vote on the merger Nov. 4.

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