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T-Mobile USA to merge with US carrier MetroPCS

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Arab Today, arab today T-Mobile USA to merge with US carrier MetroPCS

New York - AFP

T-Mobile USA unveiled plans Wednesday to merge with smaller rival MetroPCS in a deal that boosts the fourth-largest US wireless carrier\'s effort to compete in the fast-growing American market. T-Mobile\'s parent Deutsche Telekom firm will hold a 74 percent stake in the new company, which will remain the number four provider and will position itself as \"the leading value carrier in the US wireless marketplace,\" a statement from the two firms said. \"We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom\'s position in the expanding US wireless market,\" said Rene Obermann, chief executive of Deutsche Telekom. \"The T-Mobile and MetroPCS brands are a great strategic fit -- both operationally and culturally. The new company will be the value leader in wireless with the scale, spectrum and financial and other resources.\" Obermann said the deal creates \"a sustainable and financially viable national challenger in the US.\" The new company will retain the T-Mobile name, and \"will have the expanded scale, spectrum and financial resources to aggressively compete with the other national US wireless carriers,\" the joint statement said. The deal brings together T-Mobile\'s 33 million subscribers, and the 9.3 million with MetroPCS, but the new firm will remain well behind US market leaders AT&T, Verizon Wireless and Sprint Nextel. Significantly, it combines the spectrum holdings to give the new firm greater network coverage in deploying new high-speed networks for smartphones known as LTE. The transaction is structured as a recapitalization, in which MetroPCS makes a cash payment of $1.5 billion to its shareholders and acquires all T-Mobile stock and issues 74 percent of the stock to Deutsche Telekom. Deutsche Telekom will roll its intercompany loan into $15 billion in unsecured notes in the new company. The German telecom giant will also provide a $500 million unsecured credit line and a $5.5 billion backstop commitment. The combined company is expected to have some 42.5 million subscribers and $24.8 billion of revenue. Acquired at the height of the dot-com boom for 40 billion euros ($52 billion), T-Mobile USA has proved a drag on Deutsche Telekom\'s business. AT&T in December abandoned a $39 billion effort to buy T-Mobile after US authorities moved to block the deal as anti-competitive. John Legere, president and chief executive of T-Mobile, said the deal is a \"logical and significant step\" which allows for expansion of the carrier. \"Our enhanced spectrum position will be the foundation for a faster and more reliable network, and will allow us to deploy a deeper and more robust LTE rollout, particularly in major metropolitan areas,\" he said. \"We will be a stronger, value-focused competitor, providing customers with offerings such as our unlimited nationwide 4G Data and \'bring your own device\' plans.\" Roger Linquist, chairman and chief executive of MetroPCS, said the combination \"will allow MetroPCS to expand its no-contract offerings into new major metro areas and enhance our combined spectrum portfolio.\" Upon completion of the deal, Legere will serve as president and CEO of the firm to be headquartered in Bellevue, Washington. The company will operate T-Mobile and MetroPCS as separate customer units. MetroPCS, which jumped 17.8 percent on Tuesday in anticipation of the deal, fell 5.9 percent to $12.76. Deutsche Telekom shares added 0.64 percent to 9.80 euros on the Frankfurt exchange. Independent telecom analyst Jeff Kagan said the deal helps both firms but fails to create a firm with the heft to compete against the major three US carriers. \"A merger with AT&T would have made the most sense for T-Mobile,\" Kagan said. \"Next best would have been a merger with Sprint. This T-Mobile merger with MetroPCS makes sense, and will be helpful, but just not as much.\" Citi analyst Simon Weeden said the deal is \"potentially helpful\" for T-Mobile but \"not conclusive in its key challenge of checking the outflow\" of subscribers.

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