T-Mobile-MetroPCS Merger Approved by FCC, Awaiting Shareholder Decision

The merger of the No. 4 and No. 5 cell phone carriers in the U.S. — T-Mobile USA and MetroPCS, respectively — was today approved by the Federal Communications Commission (FCC), leaving only one final step in the merger process. This level of approval was expected and, indeed, the FCC didn't apply significant conditions to the deal.

Last week, the Justice Department also signed off on the merger, leaving only a vote by MetroPCS shareholders, who are expected to convene in a month's time, to ultimately decide its fate. If the deal gets this final approval, T-Mobile USA's parent company, Deutsche Telekom AG, will hold a 74 percent stake in the combined company, leaving the remainder to MetroPCS shareholders. Those shareholders will also receive a special dividend of around $1.5 billion.

However, it seems that MetroPCS' largest shareholder, American hedge fund manager John Paulson, at least is against the deal, as he believes it will burden the company with debt. He added that Deutsche Telekom is getting a better deal than MetroPCS' shareholders. MetroPCS executives disagreed in a letter sent to shareholders, though, saying the deal is the "best strategic alternative" for its shareholders, also pointing out that a stake in the combined company will be worth much more than in MetroPCS itself.

This merger deal first began in the latter half of 2012 and has been considered a good thing by regulators as it will create a "beefed up, low cost carrier" capable of giving consumers another viable choice in a market largely dominated by Verizon and AT&T. On the flipside, regulators blocked AT&T's attempt to acquire T-Mobile in December 2011, fearing such a merger would reduce competition in the industry.

Based on a consensus of analyst estimates for 2012, the combined company created in the T-Mobile USA-MetroPCS deal would have about 42.5 million subscribers and $24.8 billion in revenue.