T-Mobile to merge with MetroPCS

T-Mobile to merge with MetroPCS
Updated 04 October 2012

T-Mobile to merge with MetroPCS

T-Mobile to merge with MetroPCS

NEW YORK: T-Mobile USA announced plans yesterday to merge with US-based carrier MetroPCS in a cash and stock deal that gives T-Mobile’s parent Deutsche Telekom firm a 74 percent stake in the new company.
The deal takes two carriers struggling to keep up with the big three and creates “the leading value carrier in the US wireless marketplace,” a statement from the two firms said.
“We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom’s position in the expanding US wireless market,” said Rene Obermann, chief executive of Deutsche Telekom.
“The T-Mobile and MetroPCS brands are a great strategic fit both operationally and culturally. The new company will be the value leader in wireless with the scale, spectrum and financial and other resources.”
Obermann said the deal creates “a sustainable and financially viable national challenger in the US.”
The new company will retain the T-Mobile name, and “will have the expanded scale, spectrum and financial resources to aggressively compete with the other national US wireless carriers,” the joint statement said.
The deal brings together T-Mobile’s 33 million subscribers, and the 9.3 million with MetroPCS, but the new firm will remain well behind US market leaders AT&T, Verizon Wireless and Sprint Nextel.
Significantly, it combines the spectrum holdings to give the new firm greater network coverage in deploying new high-speed networks for smartphones known as LTE.
The transaction is structured as a recapitalization, in which MetroPCS makes a cash payment of $ 1.5 billion to its shareholders and acquires all T-Mobile stock.

Deutsche Telekom will roll its inter-company loan into $ 15 billion in unsecured notes in the new company.
The German telecom giant will also provide a $ 500 million unsecured credit line and a $ 5.5 billion backstop commitment.
The combined company is expected to have some 42.5 million subscribers and $ 24.8 billion of revenue.