T-Mobile to buy SunCom Wireless of Berwyn for $2.4B

Michael E. Kalogris, the cell-phone entrepreneur who negotiated to save SunCom Wireless Holdings Inc. from bankruptcy as he recovered from a near-fatal car accident, has sold the Berwyn company to T-Mobile USA Inc. for $2.4 billion in cash and debt.

T-Mobile is a subsidiary of Germany's Deutsche Telekom AG and the SunCom deal will boost T-Mobile's coverage in the Carolinas and other parts of the South, and Puerto Rico.

T-Mobile said it will pay $27 a share for SunCom, a 23 percent premium over Friday's close. In late 2006, the troubled SunCom traded between $6 and $10 a share. The deal needs government and regulatory approvals, and the approval of SunCom shareholders. The companies said it could close by mid-2008.

SunCom shares closed up $3.65, or 16.6 percent, to $25.65 in New York Stock Exchange trading today.

Michael Nelson, telecom analyst with the Stanford Group in New York, said big cellular phone companies have been acquiring rural cellphone networks. "This is one of the last ones around," he said of SunCom. "The price seems pretty reasonable."

In June, AT&T said it would acquire Dobson Communcations Corp., a large rural cellular provider, for $2.8 billion in cash. A month later, Verizon Wireless announced it would purchase Rural Cellular Corp. for $757 million in cash. Last month, Alltel Corp. shareholders approved a $24.7 billion buy-out by two private investor groups.

Nelson said he anticipated T-Mobile would do the SunCom deal because it shares cellular technology with the Berwyn company and pays substantial roaming fees to it.

SunCom "will round out our domestic footprint, allowing us to serve 98 of the top 100 markets, and will significantly benefit our financial position by reducing roaming expense," Robert Dotson, president and chief executive officer of T-Mobile USA, said in a statement.

A spokeswoman said T-Mobile would expand the population in its coverage area to 259 million people from 244 million with the deal. T-Mobile also said it expects to realize savings of $1 billion in lower roaming and operating expenses.

SunCom employs 1,900 in the United States and Puerto Rico, with about 100 employees in the Berwyn headquarters. The employees have not been told what may happen to them, SunCom spokeswoman Rose Cummings said in an e-mail. "Those details will be worked through during the transition," she wrote, noting that T-Mobile said in its statement the deal would "add a talented group of employees."

Kalogris was not available for comment.

SunCom, founded in 1999 and formerly known as Triton PCS, operates a cellular network in the Carolinas, eastern parts of Georgia and Tennessee, Puerto Rico, and the U.S. Virgin Islands. It had struggled for years, especially after 2004, when one of its primary customers, AT&T Wireless, was acquired by Cingular.

The merger meant AT&T no longer needed to use SunCom's network as it had. SunCom lost $497 million in 2005 and $337 million in 2006. Kalogris restructured the company by having debtholders swap debt for stock.

In the midst of the company's financial woes, Kalogris was severely injured when his car collided with a vehicle driven by a British visitor on the wrong side of the road.

The May 2006 accident, which also injured his son-in-law, crushed Kalogris' chest; shattered parts of his feet, hands, arms and legs; and caused internal bleeding and injuries. He couldn't return to work for several months.