T-Mobile buys local SunCom Wireless

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 in Puerto Rico.

T-Mobile said it would 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.

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

Michael Nelson, telecom analyst with the Stanford Group in New York, said big cell phone firms had been buying rural cell-phone networks. "This is one of the last ones around," he said of SunCom. "The price seems pretty reasonable."

In June, AT&T Inc. said it would acquire Dobson Communications Corp., a large rural cellular provider, for $2.8 billion in cash. A month later, Verizon Wireless announced that it would buy Rural Cellular Corp. for $757 million in cash. Last month, Alltel Corp. shareholders approved a $24.7 billion buyout by two private investors.

Nelson said he anticipated T-Mobile's SunCom deal because T-Mobile shared cellular technology with the Berwyn company and has paid 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 that, with the deal, T-Mobile would expand the potential customers in its coverage area to 259 million people from 244 million. T-Mobile also said it expected to save $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's statement said it 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. SunCom lost $497 million in 2005 and $337 million in 2006. Kalogris restructured the company by offering stock to debt-holders.

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 could not return to work for several months.