TRISTANI, HOLLINGS DISAVOW ‘LETTERS’ ON VOICESTREAM, DT
Beating down latest VoiceStream-Deutsche Telekom rumor, FCC Comr. Tristani took unusual step Wed. of issuing statement disavowing forged correspondence between herself and Sen. Hollings (D-S.C.) on slowing down pending merger. Pair of faked letters began circulating widely in Washington Tues., including one purportedly from Hollings asking Commission to defer acting on transaction until he had chance to introduce bill clarifying Sec. 310 of Communications Act. Agency spokesman said issue has been handed over to FCC Inspector Gen. for review. Hollings aide dismissed letter as hoax. Although Tristani said she didn’t typically comment on pending mergers, she said neither she nor staff members had corresponded with Hollings on deal. FCC faces self-imposed deadline of April 8 to act on proposal within 180 days after it was filed. “I am deeply troubled that the Commission’s process is being used for deceitful purposes, and I have asked the Chairman to initiate a full investigation of this matter and to refer it to other federal agencies as appropriate,” Tristani said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
“Correspondence,” which lacks either signature or letterhead from Hollings, is addressed to Tristani’s legal adviser Adam Krinsky. Purported Hollings letter refers to April 2 “letter” from Tristani, saying: “Please be advised, I am submitting legislation clarifying the portion of section 310… I trust the Commission will refrain from offering its decision until this legislation has had a complete airing in the U.S. Congress.” Letter from Tristani aide apparently contained forged signature. One from “Hollings” was labeled electronic ex parte filing and contained docket number of proceeding. Missives drew attention in Washington after Wall St. analysts passed on “letters” to industry observers here. Letters apparently aroused suspicion early based on details such as missing letterhead.
Hollings spokesman said his office knew about hoax Tues. but didn’t take it seriously because it seemed to be of low quality, with “Hollings” communication not even on stationery. Hollings’s office has contacted office of Senate Legal Counsel, spokesman said, “and we are awaiting advice on action.” He called whole matter “totally absurd.” Hollings, ranking Democrat on Senate Commerce Committee, has been strong opponent of VoiceStream-DT merger, saying that Sec. 310(a) of Communications Act took precedence over other parts of provision in cases in which foreign govt. had indirect control of radio licensee, barring approval of transactions such as pending deal with DT. German govt. still has nearly 59% stake in DT, although that will be diluted after VoiceStream merger closes.
Denouncements of faked correspondence mark latest twist in FCC proceedings, following widely circulated rumors Tues. that Tristani and FCC Comr. Ness both were leaning against approving merger, speculation that apparently stemmed from discredited arbitrage analyst note and was viewed with skepticism by industry observers in Washington. Responding to Tues. rumors, Legg Mason issued research note that discredited “false alarm” of FCC opposition, saying: “We believe not only that such a conclusion is premature but that ultimately, when a vote is taken, there will be a majority in favor of the deal.” Item on merger apparently isn’t yet on circulation among commissioners, although several analyst indicated Wed. they are bullish that deal will pass regulatory muster.
As speculation on regulatory prospects of deal circulated Tues., VoiceStream shares tumbled more than 9% on Nasdaq on day when Nasdaq itself fell 6.2%. Wall St. Journal report Wed. said market fears on regulatory prospects for merger affected arbitrage spread of deal, widening it to about $18, up from $12 earlier in week. Typically as deal proceeds toward closure, spread becomes narrower. On Wed., VoiceStream shares rose more than 10% to close at $92.56. Transaction has been expected to close in early June and still awaits approval from both FCC and Committee on Foreign Investment in U.S.