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T-Mobile, MetroPCS to Merge

T-Mobile US Inc. and MetroPCS Inc. (NYSE: PCS) have confirmed plans to merge operations to create a 42.5-million-subscriber wireless provider in the U.S.

The deal gives both companies, which will operate as separate units, a big push into 4G Long Term Evolution (LTE) in the future. Combining T-Mobile and MetroPCS's advanced wireless spectrum (AWS) will provide greater network coverage and a path to at least 20x20 MHz channels of 4G LTE in many cities. Existing MetroPCS customers will be migrated to a common LTE-based network as they upgrade their handsets.

MetroPCS currently has around 19 markets on LTE on much smaller and slower channels. T-Mobile was planning to intro the faster data service in 2013.

Under the terms of the deal, shareholders in MetroPCS will get $1.5 billion in cash and 26 percent ownership of combined company. Deutsche Telekom AG (NYSE: DT), which owns the larger T-Mobile USA unit, will get 74 percent ownership of the new operator.

The boards of both companies have approved the deal. The transaction is structured as a recapitalization, in which MetroPCS will declare a one for two reverse stock split, make a cash payment of $1.5 billion to its shareholders -- approximately $4.09 per share prior to the reverse stock split -- and acquire all of T-Mobile's capital stock by issuing to Deutsche Telekom 74 percent of MetroPCS's common stock on a pro forma basis.

Deutsche Telekom will also roll its existing inter-company debt into new $15 billion senior unsecured notes of the combined company, provide the combined company with a $500 million unsecured revolving credit facility and provide a $5.5 billion "backstop commitment for certain MetroPCS third-party financing transactions."

The company will operate T-Mobile and MetroPCS as separate units, led by Jim Alling, currently chief operating officer of T-Mobile, and Thomas Keys, currently president and chief operating officer of MetroPCS, respectively. John Legere will serve as CEO of the combined company, J. Braxton Carter, currently chief financial officer and vice chairman of MetroPCS, will be the CFO.

The transaction is expected to close in the first half of 2013.

We'll have more on this story after the company's conference call later this Wednesday morning.

For more



— Dan Jones, Site Editor, Light Reading Mobile

joset01 12/5/2012 | 5:19:56 PM
re: T-Mobile, MetroPCS to Merge

Will this get regulatory approval? Its a much smaller deal than AT&T and T-Mobile but still...

joset01 12/5/2012 | 5:19:55 PM
re: T-Mobile, MetroPCS to Merge

Combined company has:


$4.1B capex


$2.1B in free cash flow


expected increase in free cash flow.


$6-7B synergies over the deal net of one time costs.

joset01 12/5/2012 | 5:19:55 PM
re: T-Mobile, MetroPCS to Merge

T-Mobile CEO Legere says:


"We will increase our contiguous spectrum for LTE by 40%. 2x20MHz channels in many major areas. Complimentary  AWS spectrum in NYC, LA and Dallas.


"We will now be the leading provider of no contract service in the U.S."


Will refarm the spectrum:


"We are not going to try and smash together two separate networks."


Space "almost immediately" for MetroPCScustomers on T-Mobile's HSPA+


Complete the migration by the end of 2015.


"T-Mobile is here to stay, we're here to fight and here to win."

joset01 12/5/2012 | 5:19:55 PM
re: T-Mobile, MetroPCS to Merge

Creating the value-leader carrier in the U.S.


"We are here to compete, we are here to unlock value and we are to win."


Describes the deal as like an IPO but with "synergies of 6 to 7 billion."

bergea 12/5/2012 | 5:19:54 PM
re: T-Mobile, MetroPCS to Merge

John Legere, the CEO of the NewCo resulting from the merger of MetroPCS and T-Mobile USA, has positioned network synergies as the key to the success of the combined company.  They will accelerate the migration of MetroPCS customers from the existing CDMA/EVDO network to the T-Mobile USA HSPA+/LTE network, offering device upgrade incentives especially for heavy data users.  They plan to phase in the re-farming of MetroPCS spectrum beginning in 2014 and plan to shut down this network at the end of 2015.  T-Mobile USA CTO Neville Ray will be the key technology leader to make this network migration successful, and he will have an opportunity to explain this in great detail during his 4G World keynote on Wednesday October 30.    

Griz054 12/5/2012 | 5:19:53 PM
re: T-Mobile, MetroPCS to Merge

I think this will be good for consumers and especially my company since we are a T-Mobile MVNO. I made the switch from Verizon a couple of months ago and couldn't be happier. Check my profile for more info. Thanks.

krishanguru143 12/5/2012 | 5:19:53 PM
re: T-Mobile, MetroPCS to Merge

I think it depends on how much of a stink Sprint puts out there.  This merger would be bad for the Sprint business model.

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