T-Mobile in Talks to Buy MetroPCS

T-Mobile US Inc. is in talks to buy out MetroPCS Inc. (NYSE: PCS), as T-Mobile parent company Deutsche Telekom AG (NYSE: DT) confirmed Tuesday.

The talks aren't that close to a resolution, but DT says they're happening, AllThingsD reports.

It's not a huge surprise, as analysts at UBS AG had already pegged a MetroPCS buyout as a way for T-Mobile, the U.S.'s fourth-ranked operator, to expand its pay-as-you-go customer base and grab more spectrum for 4G services. Bloomberg and other outlets were saying Tuesday morning that a deal could be close.

Unlike T-Mobile, MetroPCS uses CDMA and LTE for connectivity, but it has advanced wireless services (AWS) (1700/2100MHz) spectrum licenses that T-Mobile could use.

"We believe integration would be straightforward despite technology differences, as T-Mo [which is apparently what all the cool kids call it] would simply shut down the PCS network over time while spending appropriately to retain the customers and reuse the spectrum," writes UBS analyst John Hodulik in a research note issued Tuesday.

Like T-Mobile, MetroPCS holds AWS licenses in the C, D and E bands in massive markets like New York City, Los Angeles and Dallas. T-Mobile is starting to use this spectrum to deploy 4G LTE services, which it wants to launch in 2013.

Why this matters
A MetroPCS buyout would make T-Mobile a stronger challenger on the U.S. wireless scene. It would set the stage between Sprint and T-Mobile for a battle royale to be the unlimited data 4G provider of choice in American cities and beyond.

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— Dan Jones, Site Editor, Light Reading Mobile

krishanguru143 12/5/2012 | 5:19:59 PM
re: T-Mobile in Talks to Buy MetroPCS

The big question is where to get additional spectrum and in reality, acquisition is the only way.  Verizon lucked out with the cable companies and they were probably the only current operator able to pull that off.  In reality, they don’t compete with the cable companies on the broadband side.  A few years ago they announced no new build outs were planned and for the most part., FiOS was not widely deployed.  The copper side of the business has slow DSL speeds; they are selling off the legacy side as much as they can as well.  They don’t want to offer phone service and the cable companies are more than happy too.  AT&T competes directly against the cable companies and would never have gotten the chance to purchase the spectrum which is why they went after T-Mobile.


I would also expect to see that if the two combine, you will see VoLTE a priority and that the phones will use W-CDMA for the 3G so that the current CDMA spectrum can start to be reclaimed.  The key component is getting compatible phones out there as soon as they can.  Within two years the majority would be off of the legacy CDMA network and then they could further entice the holdouts to get a new phone and reclaim all of the spectrum.


What will this do to the Metro PCS relationship with Sprint and Verizon Wireless?

Where will the money come from?

joset01 12/5/2012 | 5:19:59 PM
re: T-Mobile in Talks to Buy MetroPCS

Is a $5+ B (probably much more) MetroPCS buy-out worth it for T-Mobile to get more 4G spectrum? Kevin Fitchard from GigaOM and I are talking about this on Twitter.

Remember that T-Mobile paid over $4B for its AWS licenses in 2006.

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