VoiceStream to Buy Omnipoint for $4.5 Billion

Voice-Stream Wireless Corp. said Wednesday it has agreed to buy Omnipoint Corp. for about $4.5 billion to create a coast-to-coast U.S. cellular telephone network.

VoiceStream said it would pay 0.825 share and $8 in cash for each share of Omnipoint, or about $32.34 a share, a 55% premium over Omnipoint’s closing share price Wednesday. Omnipoint has $2.15 billion in debt that VoiceStream will assume.

VoiceStream and Omnipoint use the global system for mobile communications, or GSM, a digital standard. On their own, their customer growth was hamstrung because they offered service only in limited regions. The combination would give VoiceStream a nationwide network to compete against AT&T; Corp., Sprint Corp. and Nextel Communications Inc., which use technologies that differ from GSM and have coast-to-coast coverage.

Analysts and investors have long speculated that Bethesda, Md.-based Omnipoint, which operates in the Midwest and East Coast, would be purchased. VoiceStream primarily serves the West.

The company has been seeking strategic investors for about a year.

VoiceStream also said late Wednesday that Hutchison Telecommunications Ltd., which holds a 24% stake in VoiceStream, has agreed to invest $957 million in the combined company. Hutchison Telecom is owned by the Hutchison Whampoa Ltd. investment firm based in Hong Kong.

In addition, VoiceStream said it will start a joint venture with Cook Inlet Region Inc. to buy some licenses held by Omnipoint. Cook Inlet, an Anchorage-based company owned by 6,900 Alaskan Indian, Eskimo and Aleut descendants, will own 50.1% of the venture.

Shares of Bellevue, Wash.-based VoiceStream rose 13 cents to close at $29.50. Omnipoint rose 6 cents to $20.81.

The deal was announced after the close of U.S. trading.