Ron Sommer wants to be big in the US

As part of the deal, Deutsche Telekom will provide Voicestream with $5bn in cash to buy new telephone licences.

The boards of both companies have given their backing to the deal, and more than 50% of Voicestream's shareholders have given the deal the nod.

Deal too expensive?

But news of the deal was not met warmly by investors in Frankfurt, with Telekom's shares falling by almost 12% to close at 48.79 euros because some participants think it is paying too much.

"It's a good idea from a strategic point of view," said Theo Kitz, analyst at Merck Finck & Co in Munich.

"But there will be a hit on earnings, a goodwill writedown and the valuation of Voicestream is much too high."

But some analysts said Deutsche Telekom had no choice but to pay a high price if it wants to satisfy its global ambitions.

"It's a high price," said one London-based analyst. "But it is the cost of entry and Deutsche Telekom have no other option. They have to do it."

But Voicestream's major shareholders seem to favour the deal.

Chicago-based Telephone and Data Systems said it would exchange its 14% stake in Voicestream for cash and stock in Deutsche Telekom.

Hong Kong conglomerate Hutchison Whampoa will sell its 22% stake in VoiceStream to Deutsche Telekom for $10.86bn in cash and stock.

And Finnish telecom operator Sonera said it would sell its 7.9% Voicestream share to Deutsche Telekom for $3.7bn.

If and when the deal is complete, Voicestream shareholders will own about 22% of Deutsche Telekom.

Regulatory hurdles

The Deutsche Telekom bid could raise some regulatory issues in the US.

Senator Ernest Hollings has introduced legislation that would prohibit the US Federal Communications Commission from allowing a transfer of Voicestream to Deutsche Telekom on national security grounds.

The German government still has a majority stake in the former state telephone company.

But under Monday's deal Deutsche Telekom said the German government's ownership would shrink to 45%.

Mr Sommer sought to reassure US political concerns in an interview in a German magazine.

Global ambitions

"We are not coming as invaders, we will create jobs," Mr Sommer said in an interview released ahead of publication in Monday's Der Spiegel magazine.

"There are politicians everywhere who want to turn back the tide of liberalisation. But for me, the United States is a model for liberal world trade."

The EU has also reportedly threatened to take the US to the World Trade Organisation if it tries to block the telecoms deal, which it says would violate a 1997 trade agreement.

Deutsche Telekom has been seeking to expand globally for some time and has amassed a war chest of some 100bn euros.

But the former state telecoms monopoly has seen most of its international ambitions thwarted.

Its Global One alliance with France Telecom and US long-distance operator Sprint fell apart, and plans to merge with Telecom Italia were thwarted when Olivetti won a hotly fought take-over battle.