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Is MetroPCS DT's Magenta Exit?

5:35 PM -- Maybe Deutsche Telekom AG (NYSE: DT) is merging its T-Mobile US Inc. unit with MetroPCS Inc. (NYSE: PCS) so the German giant can lessen its stake in the U.S. wireless market, Heavy Reading analyst Berge Ayvazian suggests.

"It's a exit strategy," said Ayvazian when we spoke Tuesday afternoon. "Over the next year or two, they can basically use the MetroPCS public stock as an exit."

DT wouldn't need to move its entire T-Mobile stake but could lessen it and take T-Mobile public to boot, which would be more difficult with the unit as it stands.

DT and MetroPCS confirmed Tuesday that they are in talks over a merger. Neither party is giving any more detail right now.

"This is a way to combine the two companies. They're nicely complementary, particularly on AWS spectrum," Ayvazian says.

MetroPCS holds AWS licenses in major markets like New York, Los Angeles and Dallas, using them for its LTE service. T-Mobile will use the same 1700MHz/2100MHz spectrum for its upcoming 4G Long Term Evolution (LTE) deployment in 2013, so MetroPCS would give it more spectrum depth in some major cities.

Of course, the question would be what T-Mobile could do with MetroPCS's existing CDMA network and the users on that network. T-Mobile's aim would be to get the MetroPCS customers on its frequencies as quickly as possible so it can start to refarm that spectrum.

Even though the customers are pay-as-you-go and contract-free, Ayvazian expects it would take at least a couple of years to completely make the switch.

Well, it sounds relatively simple laid out like that on the page. But what do you think? With nearly 10 million users on MetroPCS, it may not be so smooth and simple for the two entities to combine into one rival for Sprint Corp. (NYSE: S), Verizon Wireless or AT&T Inc. (NYSE: T). (See T-Mobile in Talks to Buy MetroPCS and Analyst: T-Mobile Is M&A Challenger for Sprint.)

— Dan Jones, Site Editor, Light Reading Mobile

gtchavan 12/5/2012 | 5:19:57 PM
re: Is MetroPCS DT's Magenta Exit? May be Dt has already driven tmobile in to the ground and looking to pull a worldcomm and expense their blunder as merger cost.
fgoldstein 12/5/2012 | 5:19:52 PM
re: Is MetroPCS DT's Magenta Exit?

Neither one of them sells iPhones.  Lots of Androids.


Replacing Metro's CDMA phones could be hard, though.  They sell the phones without a contract, so without the usual subsidies.  This gives users an incentive to hold onto them longer, unlike say VZ's "new in two" policy.  So they may want to leave the CDMA network in place for several years, even if it means shrinking its bandwidth.  CDMA is very flexible about that.


Not that Metro ever had much of a selelction of phones.  Being small, they don't have athe clout of a vZW or ATTM, so they have a lot of Chinese brands. The combined company may have more clout to get phones for both networks.

fgoldstein 12/5/2012 | 5:19:52 PM
re: Is MetroPCS DT's Magenta Exit?

Neither one of them sells iPhones.  Lots of Androids.


Replacing Metro's CDMA phones could be hard, though.  They sell the phones without a contract, so without the usual subsidies.  This gives users an incentive to hold onto them longer, unlike say VZ's "new in two" policy.  So they may want to leave the CDMA network in place for several years, even if it means shrinking its bandwidth.  CDMA is very flexible about that.


Not that Metro ever had much of a selelction of phones.  Being small, they don't have athe clout of a vZW or ATTM, so they have a lot of Chinese brands. The combined company may have more clout to get phones for both networks.

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