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Combined carrier has 43 million U.S. subscribers

Even as rival Sprint Nextel Corp. (S) puzzles over what acquisition path to go down and Verizon Communications Inc. (VZ) maneuvers to pay Vodafone Group Plc. (LON:VOD) >$100B+ USD for sole ownership of Verizon Wireless, fourth place U.S. wireless carrier T-Mobile USA has opened the next chapter in its history, merging with MetroPCS.  While both companies will retain their brands, the companies will share resources and a base of 43 million subscribers and $24.8B USD of annual revenue.

The rather complex merger deal -- approved by U.S. federal regulators in March -- 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 AG (ETR:DTE) will no longer directly own T-Mobile USA).

T-Mobile has move aggressively in recent months to become the first U.S. customer to cut subsidies on its handsets, a move that makes for more expensive smartphones, but much cheaper contracts.  T-Mobile also drew attention for its iPhone pickup in recent months, becoming the last major U.S. carrier to get the popular Apple, Inc. (AAPL) device (although T-Mobile was long been the carrier of choice for users with unlocked iPhones).

T-Mobile Dushku
[Image Source: Juergen Lehle]

The new combined carrier hopes to catch up in the LTE race, covering 200 million customers by the end of the year.  The carrier will be based out of T-Mobile USA's headquarters in Bellevue, Washington, although it will maintain a "strong presence" in MetroPCS's former headquarters hometown of Richardson, Texas.

The combined carrier will look to build on MetroPCS's market success and put T-Mobile USA's struggles behind it.

T-Mobile's relatively fresh CEO, John Legere, will stay on as CEO of the merged company.

Source: T-Mobile USA





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