Deutsche Telekom and MetroPCS agree on $1.5 billion T-Mobile merger (updated)

Blog sponsored by Engadget.com 3.10.2012 Comments Off on Deutsche Telekom and MetroPCS agree on $1.5 billion T-Mobile merger (updated)

Apparently the “significant issues” that stood in the way of a prospective T-Mobile and MetroPCS deal couldn’t have been too onerous. Just a day after acknowledging that talks were underway both boards have approved the deal according to the Wall Street Journal. Details of the deal haven’t been officially announced yet, but Financial Times Deutschland are reporting that the two carriers will be combined into a single unit in which Deutsche Telekom will hold 74 percent of shares. MetroPCS will have a 26 percent stake in the company and receive a $1.5 billion check for its troubles. Expectations are that this will put the kibosh on a recent deal T-Mobile struck with Crown Castle to lease its mobile towers for $2.4 billion. The new larger carrier will maintain the T-Mobile branding with new CEO John Legere at the helm, though, it appears the deal is structured as a reverse merger. Meaning that MetroPCS is in essence taking over T-Mobile and not the other way around.

Even with its combined subscriber base, the new T-Mobile will lag Sprint in the battle for AT&T and Verizon’s table scraps. However, it will finally give Deutsche Telekom the graceful exit from the US market that its been so desperately seeking for some time. This merger with a much smaller competitor is unlikely to raise the ire of regulators and will allow the German company to reduce its involvement and investment in a slow controlled manner by selling off stocks. We’re still awaiting official announcements from both companies and will update as the statements roll in.

Update: Official PR from T-Mobile and a video statement from CEO Legere are now waiting for you after the break. There’s a few new interesting details, including that MetroPCS’s CFO will be holding on to his position post merger. Interestingly, even though the carriers will become one company, for the foreseeable future they will maintain separate pools of customers. However, we wouldn’t be surprised to see that change as the LTE rollout accelerates and gives T-Mobile a true 4G offering. As Legere notes in the clip below, this is just the first step and the deal isn’t expected to close until sometime during the first half of 2013.

Update 2: As part of the strategy moving forward the new company plans to move customers off MetroPCS’ CDMA network and on to T-Mobile’s GSM frequencies for 3G service by 2015. The spectrum would then be repurposed to build out an LTE network.

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Deutsche Telekom and MetroPCS agree on $1.5 billion T-Mobile merger (updated) originally appeared on Engadget on Wed, 03 Oct 2012 08:13:00 EDT. Please see our terms for use of feeds.

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