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http://biz.yahoo.com/rb/020820/telecom_voicestream_report_3.html Tuesday August 20, 1:33 am Eastern Time

Reuters Business Report VoiceStream Proposes Cingular Merger -WSJ

NEW YORK (Reuters) – Wireless phone provider VoiceStream has proposed a merger with rival Cingular Wireless, in a bid to compete with market leader Verizon Wireless, the Wall Street Journal reported on Tuesday. ADVERTISEMENT

While the two companies have yet to agree on terms, the Journal cited people close to the situation as saying VoiceStream has approached Cingular about merging the two companies in a deal that would leave Cingular as the controlling shareholder.

The proposal, just weeks after VoiceStream sought a similar partnership with AT&T Wireless Services Inc. (NYSE:AWE – News), comes amid signs of government support for consolidation in the $67 billion cellular-phone industry, the paper said.

The Journal said the talks are at an early stage and could break down before any deal.

And any transaction between Cingular and VoiceStream could face regulatory hurdles as well as opposition from either of Cingular’s owners, SBC Communications Inc.(NYSE:SBC – News) and BellSouth Corp (NYSE:BLS – News).

VoiceStream, which is owned by Deutsche Telekom AG (XETRA:DTEGn.DE – News), also continues to hold on-again, off-again discussions with AT&T Wireless, although the two companies failed to agree on terms earlier this summer.

VoiceStream and Cingular declined to comment to the Journal. The companies could not be reached by Reuters.

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