The fourth and fifth largest wireless carriers in the U.S., T-Mobile and Metro PCS, have announced their intentions to merge the two companies in a complicated deal worth $1.5 billion. If regulators approve the plan, the resulting company will still be the fourth largest U.S. mobile carrier, but it will be in a better position to challenge Sprint Nextel, the third largest carrier.
The Wall Street Journal's Anton Troianovski and Archibald Preuschat reported, "The combined company will be called T-Mobile and run by T-Mobile Chief Executive John Legere. MetroPCS customers will be moved over to T-Mobile's network gradually as they upgrade their phones, and the smaller company's network will be shut down in 2015."
"The deal is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders and acquire all of T-Mobile's capital stock by issuing to Deutsche Telekom, its parent company, 74 percent of MetroPCS' common stock," explained Andrew Nusca in ZDNet. "In other words, 26 percent of the new company will be owned by MetroPCS shareholders and 74 percent will be owned by Deutsche Telekom -- a rebuff to rumors that the German company was trying to exit the U.S. market."
PCMag's Sascha Segan wrote, "MetroPCS and T-Mobile's merger isn't going to change the carriers' focus on low-cost 4G services." He added, "The merger would give the new company at least 50Mhz of wireless spectrum in key cities like New York, Los Angeles, Dallas, Detroit, Boston, and San Francisco, letting it roll out a "20x20" LTE network. That's potentially twice as fast as Verizon's network, and four times as fast as what MetroPCS currently has in most cities."
In a press release, John Legere, President and Chief Executive Officer of T-Mobile, said, “The combination with MetroPCS is another logical and significant step that will accelerate our Challenger Strategy and enable us to deliver amazing, affordable and trusted 4G services, while providing opportunities to expand geographic territories and serve more customers. Our enhanced spectrum position will be the foundation for a faster and more reliable network, and will allow us to deploy a deeper and more robust LTE rollout, particularly in major metropolitan areas. We will be a stronger, value-focused competitor, providing customers with offerings such as our Unlimited Nationwide 4G Data and ‘bring your own device’ plans. These features, along with our ability to react with greater speed and effectiveness to customer and market opportunities, will deliver value to our customers, business partners, employees and shareholders.”