WASHINGTON-Senate Majority Leader Trent Lott (R-Miss.) last week said a controversial provision that would kill the Deutsche Telekom AG-VoiceStream Wireless Corp. merger was dropped from a major appropriations bill, but added it could reappear in legislation being negotiated between Congress and the administration that could run into this week.
“It is not included in the legislation, but the conference is still going on so it could get back in,” said a Lott spokesman last Thursday. On the previous day, when asked whether the foreign-ownership amendment penned by Sen. Ernest Hollings (D-S.C.) was in the bill, Lott told Reuters, “It’s my understanding that it’s not.”
Congressional appropriators and the White House declined to confirm or deny whether the Hollings provision had been nixed. While the Clinton administration opposes the Hollings legislation, nearly one- third of the Senate initially backed the South Carolina Democrat’s bill.
However, with GOP control of the House up for grabs in next month’s election, Republicans are anxious to complete spending bills and campaign in the three weeks left before voting booths open Nov. 7.
Even if the Hollings language is removed from a bill funding the Federal Communications Commission, the National Telecommunications and Information Administration and other federal agencies, VoiceStream and Deutsche Telekom remain concerned about the possibility of language appearing in the conference report that might complicate FCC approval of the deal.
The Hollings provision would prohibit the FCC in fiscal 2001 from allowing a firm more than 25-percent owned by a foreign government from acquiring a U.S. telecom carrier. The German government holds more than a 50-percent stake in Deutsche Telekom, but recently promised to eventually dilute its interest in DT. Some observers suggest DT has a strong incentive to privatize through public stock offerings, given its shortage of cash and employee pension obligations.
The deal, having passed Justice Department antitrust scrutiny, is pending before the FCC.
The Hollings appropriations provision is a scaled-down version of broader legislation that would permanently forbid the FCC from signing off on telecom mergers, like Deutsche Telekom-VoiceStream.
Companion legislation is sponsored in the House by Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass.).
Because congressional action this year on House and Senate stand-alone bills is unlikely, Hollings chose to attach his legislation to a must-pass fiscal 2001 spending bill.
Under FCC rules, companies more than 25-percent owned by foreign governments cannot buy American telecom companies. However, under the agency’s public interest standard, the FCC can waive the 25 percent rule.
For example, the FCC might looked kindly on a merger involving a foreign country that’s a member of the World Trade Organization and a signatory to the 1997 global telecom trade agreement.
Hollings’ staff was not willing to concede defeat late last week.
“I don’t have confirmation,” said Andy Davis, a Hollings spokesman. “He’s not going to comment on the bill until it’s completed.”
While VoiceStream and Deutsche Telekom have much at stake in the Hollings foreign ownership battle, the legislation has broader implications for other foreign government-owned telecommunications giants that need American acquisitions to gain a U.S. presence.
The combination of the Hollings controversy and the euro’s sharp decline has caused a wild roller coaster ride for a Deutsche Telekom-VoiceStream merger originally priced at $50.7 billion but now valued much lower.
In other action last week, President Clinton signed the high-tech visa bill and Congress passed technology-transfer legislation that will foster the licensing of government-owned inventions by federal agencies.
The House, meanwhile, passed a bipartisan bill to promote commercial space launch capability and U.S. satellite competitiveness by extending launch indemnification for four more years, or through the end of 2004.
