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VoiceStream's loss widens
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November 6, 2000: 7:44 p.m. ET
Stock plunges after wireless outfit misses estimates by more than $1
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NEW YORK (CNNfn) - VoiceStream Wireless Corp., which is set to merge with Germany's Deutsche Telekom AG, reported a third-quarter loss Monday that was much wider than Wall Street had expected on sales that beat expectations and said its merger is on track for completion in 2001.
After the closing bell, VoiceStream (VSTR: Research, Estimates) said it lost $661.3 million or $3.02 per share during the period ended Sept. 30. That compares with a loss of $93 million or 97 cents per share during the same period last year. Analysts had generally expected VoiceStream to lose $1.99 per share during the quarter, according to a survey conducted by earnings tracker First Call.
 VoiceStream shares fell $2.44 to $117.38 in Nasdaq trade ahead of the earnings news. They plunged $21.25 to $96.12 in after-hours trade.
Meanwhile, at $562.2 million, VoiceStream's revenue came in ahead of expectations. Analysts had expected the company to log revenue of roughly $509.9 million during the quarter, according to the First Call survey.
During the quarter VoiceStream's total operating expenses soared a staggering 443.8 percent to $1.07 billion from 196.7 million during the same period last year.
Executives at VoiceStream in Santa Clara, Calif., said they are confident that they will complete their deal with Deutsche Telekom, which federal lawmakers have tried to block, during the first half of 2001.
In a teleconference with analysts after the earnings release, Cregg Baumbaugh, VoiceStream's executive vice president of finance, said much of its expenses resulted from non-recurring items, including "executive compensation arrangements" related to the Deutsche Telekom transaction as well as an upgrade of the company's billing and customer-service systems.
Sales and marketing expenses also were higher than expected, due in part to the addition of more new customers than the company had anticipated during the quarter, Baumbaugh said.
The company added 501,200 subscribers in the quarter, bringing its total subscriber base to 3.1 million, including 2.3 million monthly subscribers and 748 thousand prepaid customers, Baumbaugh said.
VoiceStream's latest results reflect the effects of its acquisitions of Omnipoint and Aerial.
Deutsche Telekom deal on track
In July, VoiceStream agreed to be acquired by Deutsche Telekom for roughly $46 billion in cash and stock. The deal included a $5 billion cash investment that Deutsche Telekom agreed to make in VoiceStream.
The deal, which would create a international wireless telecom powerhouse with about 19.8 million subscribers worldwide, has faced a number of hurdles.
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We remain optimistic that we will complete the merger late in the first quarter or early in the second quarter of 2001
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John Stanton
Chairman and chief executive
VoiceStream Wireless |
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Last month, members of the U.S. House Subcommittee on Telecommunications, Trade and Consumer Protection tried to scuttle the deal, citing concerns about indirect ownership of telecommunications assets by non-U.S. companies.
"As was widely reported, an amendment was attached to the Senate version of an appropriations bill which would have categorically banned our transaction," VoiceStream Chairman and Chief Executive John Stanton said Monday. "It is our understanding that that language has been removed, but the final budget has not been approved."
"While we still have a long way to go, we remain optimistic that we will complete the merger late in the first quarter or early in the second quarter of 2001," Stanton added.
Since it struck the merger agreement with Deutsche Telekom, VoiceStream has entered into a series of smaller agreements that it says gives it access to as many as 260 million potential wireless subscribers.
These include an agreement to acquire Powertel and Cook Inlet's interest in its joint ventures as well as spectrum swaps that extend the company's reach in California and Nevada, Stanton said.
VoiceStream does not provide specific forecasts for future operating results. 
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