Feature Article

October 03, 2012

T-Mobile USA Acquires MetroPCS to Strengthen Position in U.S.

On Tuesday, MobilityTechzone reported that the struggling T-Mobile USA’s parent company, Deutsche Telekom AG, was planning to buy MetroPCS Communications and merge it with its U.S. wireless business. This would strengthening T-Mobile’s presence in the market to compete with rivals like Verizon Wireless and AT&T.

On Wednesday, Deutsche Telekom announced that it inked a definitive agreement with MetroPCS Communications to combine T-Mobile USA and MetroPCS to create a leading value carrier in the U.S. wireless marketplace.

According to Deutsche Telekom, the combined operator will deliver an enhanced customer experience through a wider selection of affordable products and services, deeper network coverage and a clear-cut technology path to one common LTE network.

As per the announcement, the combined company, which will retain the name T-Mobile, will create an operator with more than 40 million subscribers. In a joint statement, the two companies said that Deutsche Telekom AG, the owner of T-Mobile USA, will hold 74 percent of the new business, while MetroPCS's shareholders will hold the remainder 26 percent – as well as receive a payment of about $1.5 billion.

According to Mike Roberts, principal analyst at Informa Telecoms & Media, “The deal will strengthen T-Mobile’s position in the US, increasing total subscribers by 28 percent to 43 million and increasing market share from 10 percent to 13 percent.”

Furthermore, the principal analyst Roberts believes the deal is all about LTE, with the combined spectrum assets of the companies providing a path to 2 x 20 MHz for LTE in many markets, double T-Mobile USA’s current plans for 2 x 10MHz for LTE.

“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,” said T-Mobile president and CEO John Legere. “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.”

Likewise, Roger D. Linquist, chairman and CEO at MetroPCS, thinks the combined company will provide cutting-edge 4G LTE services and accelerate its roll-out of 4G LTE. The MetroPCS chief also believes this merger will allow his company to expand its no-contract offerings into new major metro areas and enhance the combined spectrum portfolio, which provides the potential to offer 4G LTE over at least a full 20x20 MHz in many metro areas.

Deutsche Telekom, however, is committed to investing in order to improve its scale and strength in the U.S. market. It will have to do more in the future, though, as even after the acquisition of MetroPCS, it will still have less than half the market share of the two dominant players.

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Edited by Braden Becker

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