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VoiceStream, AT&T Wireless in merger talks

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CIOL Bureau
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NEW YORK: VoiceStream Wireless, controlled by Deutsche Telekom AG, is in

talks to merge with AT&T Wireless Services Inc. a move that would create the

second largest cellular phone company in the US, according to a Wall Street

Journal report.

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Citing people close to the talks, the paper said any deal could be valued at

$10 billion though it emphasized talks are "very preliminary" and may

not result in any merger.

Both AT&T Wireless and VoiceStream have held talks with a number of

companies in recent months, according to the report, with no agreement reached.

Deutsche Telekom declined to comment on the report.

Faced with high marketing costs, large customer turnover, lack of pricing

power, and high costs of upgrading to higher speed networks, wireless telephone

companies have been under pressure to consolidate in recent months. VoiceStream

is the smallest wireless company in the US, while AT&T Wireless is number

three.

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People close to the current talks say executives from VoiceStream and

AT&T Wireless have been holding discussions about a deal that would combine

the companies and make VoiceStream the dominant shareholder, the paper said.

A deal between VoiceStream and AT&T Wireless would create the number two

wireless company with 25 million subscribers, 4.4 million short of the biggest

player in the industry Verizon Wireless, a joint venture of Verizon

Communications and Vodafone.

(C) Reuters Limited.

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