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MetroPCS will look to turn around struggling partner

The U.S. Federal Communications Commission (FCC) today approved Deutsche Telekom AG (ETR:DTE) bid to partially acquire MetroPCS Communications Inc. (PCS) and merge it with the T-Mobile USA brand.

The rather complex deal involves MetroPCS splitting its shares, then paying out $1.5B USD to shareholders (roughly half the market cap). This will dilute its stake by taking 74 percent of the resulting shares, while giving the combined company all of T-Mobile shares (meaning Deutsche Telekom will no longer directly own T-Mobile USA).

T-Mobile USA and MetroPCS will share network resources, but will continue to operate for now as separate brands.  Together they'll have $15B USD in unsecured debt notes, with Deutsche Telekom promising to pay another $5.5B USD in financing to the merged company.

In its statement the FCC writes:

With today’s approval, America’s mobile market continues to strengthen, moving toward robust competition and revitalized competitors. We are seeing billions more in network investment, while the courts have upheld key FCC decisions to accelerate broadband build-out, promote competition, and benefit consumers, including our broadband data roaming and pole attachment rules. Today’s action will benefit millions of American consumers and help the U.S maintain the global leadership in mobile it has regained in recent years.

Mobile broadband is a key engine of economic growth, with U.S. annual wireless capital investment up 40% over the last four years, the largest increase in the world, and few sectors having more potential to create jobs. In this fast-moving space, of course challenges remain, including the need to unleash even more spectrum for mobile broadband and continuing to promote competition and protect consumers. The Commission will stay focused on these vital goals.

T-Mobile plane
[Image Source: Juergen Lehle]

The deal is now finalized as the U.S. Department of Justice (DOJ) indirectly approved it by refusing to challenge it during the statutory period, which expired last week.  Both the FCC and DOJ had sunk via lawsuits/complaints a previous bid by AT&T (T) to wholly acquire T-Mobile USA for $39B USD.

MetroPCS has been a promising success story in the U.S. market, but its new sidekick, T-Mobile USA, has struggled.  Bleeding cash and customers, T-Mobile is currently looking to become the last U.S. carrier to deploy LTE.  However, it is planning a rapid rollout -- it says it will cover 100 million Americans with LTE by "mid-2013".  It plans to cover 200 million Americans with LTE by the end of the year.

Sources: FCC, DOJ via MetroPCS

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By chick0n on 3/13/2013 1:36:34 AM , Rating: 2
Im not sure about everybody else but for me and most of my friends, that's one THING that kept them away from T-Mobile. Cuz their pathetic 3G(or their FAKE 4G) runs on AWS aka 1700MHz/2100MHz which most cool phones don't support.

and when T-mobile finally have some of the "better" phones like Note2, it's often months late which makes it no longer attractive.

I have been using Xperia Z for over a month and I'm staying away from T-mobile simply because my phone never works on them. no I don't want to go back to freaking EDGE.

I know it has something to do with FCC or whatever regulations but come on now, T-Mobile can do better than this BS. and now they are planning to do the same crap with their LTE deployment, GG T-mobile.

By ktemple on 3/13/2013 8:57:24 AM , Rating: 2
Waiting a few months is no big deal. And you call their 3G pathetic, but people routinely pull 10 to 15 Mbps down on it. The coverage is pathetic by comparison, probably, but the service itself is awesome.

T-Mobile's Number 2 problem is having weaker coverage areas. Number 1 is not having the iPhone. With their 3G speed, better plans/rates, and customer service, once they fix those two things they'll shoot to the top. Oh, look, they're specifically addressing both of those things this year! It's kind of an exciting stock right now.

By Cheesew1z69 on 3/13/2013 9:25:54 AM , Rating: 2
Number 1 is not having the iPhone.
No, It's not. I am sure they want to be just like Sprint who is riddled with billions in debt just to CARRY the iphone.

By EasyC on 3/13/2013 10:57:37 AM , Rating: 3
It's ironic, that their "Fake" 4G is faster than both Sprint and Verizon in my area... and has a LOT more coverage.

I recently made the switch and have been thoroughly impressed. Cheaper, faster, and has a decent phone selection.

Not sure what the MetroPCS merger will pose to consumers.

By V-Money on 3/13/2013 11:57:02 AM , Rating: 2
Just to bring my own real life perspective (as opposed to your random cliche comment) I just performed a quick speed test and took a screenshot so that I can post it. If you don't want to click the link (which is understandable) the results were 8381kbps download and 1702kbps upload. It may not be the fastest, but honestly tell me what I need more speed for on my cell phone. As for cutting edge phones, I always buy unlocked versions of nexus phones, so that's never been an issue. In fact the ironic part is that I originally switched to t-mobile because of the nexus one since it was the only carrier that had it. I've never looked back.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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