VoiceStream Wireless


shares showed signs of life today after the

Department of Justice

approved its proposed acquisition by

Deutsche Telekom

( DT), but the deal still faces several more hurdles.

Congressional opposition to the $34 billion acquisition, because of the German government's 58% stake in Deutsche Telekom, remains. The

House Commerce Committee

met today to hear more testimony on a bill that would ban ownership in telecom concerns by companies in which foreign governments have more than a 25% holding. A similar bill was introduced in the


in late July.

In addition, the deal must clear the

Federal Communications Commission

and other regulatory bodies.

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But VoiceStream CEO John Stanton told reporters during a break in the House hearing that he remained confident the deal would not fall foul of regulators. The company's shares rose $1.56 to close at $116.06. They are still off 16.5% from when the deal was announced in late July.

The weakness in VoiceStream's shares, despite a 300% rise over the past year in anticipation of some acquisition, belies continued investor unease over Deutsche Telekom's long-term strategy, analysts say. While VoiceStream gives the German company a U.S. wireless network, Deutsche Telekom would still have to spend more to piece together a comprehensive telecom network here.

"The stock definitely reacted differently than they perceived it would," says

Deutsche Bank

analyst Robin Lochner. He adds that while Deutsche Telekom has good revenue, its profits are "anemic." (Deutsche Bank has had an investment banking relationship with Deutsche Telekom, but not in relation to the VoiceStream deal.)

DT Chairman Ron Sommer has said that Europe's largest phone company in terms of sales will keep its acquisitive appetite in check and will focus on consolidating its operations if the VoiceStream deal goes through. But there is doubt in the market.

"If I were VoiceStream now, I'd probably welcome the opportunity to get the hell out of this deal," says one telecom hedge fund manager who does not have a position in either company.

Future capital outlays are of special concern for Deutsche Telekom after it shelled out $13.6 billion in recent months for new spectrum licenses in the U.K. and Germany. The company has since been downgraded by brokerages and says it expects possible credit downgrades from rating agencies

Standard & Poor's


Moody's Investors Service

. DT also saw first-half net income (excluding asset sales) fall nearly 30% to $607 million (681 million euros).

Of course, if worries about the deal reach a crescendo and drive Deutsche Telekom's stock below a level of 33 euros ($28.91), VoiceStream will be able to walk away. DT closed today at $40 and is down about 22% from when the deal was announced.

And, although unlikely, some believe that if price or regulators scuttle the deal, VoiceStream shareholders needn't worry. "If the DT-VoiceStream deal does not go through, there will be an ample number of other parties interested in VoiceStream," according to

WR Hambrecht

analyst Peter Friedland. "In fact, VoiceStream noted that over the last six months, the company was approached by a total of 10 parties interested in acquiring or making an investment in VoiceStream." (Friedland rates VoiceStream a buy, and WR Hambrecht has not been an underwriter for the company.)