T-Mobile, MetroPCS: Merger Has Legs - InformationWeek
IoT
IoT
Infrastructure // PC & Servers
Commentary
10/4/2012
11:08 AM
Chris Spera
Chris Spera
Commentary
50%
50%
RELATED EVENTS
Building Security for the IoT
Nov 09, 2017
In this webcast, experts discuss the most effective approaches to securing Internet-enabled system ...Read More>>

T-Mobile, MetroPCS: Merger Has Legs

T-Mobile and MetroPCS on Wednesday formally announced their intent to merge to form a new mobile carrier called T-Mobile. You can count on this one getting approved, despite the technology hurdles, but where does it leave Sprint?

T-Mobile USA on Wednesday formally announced it will buy MetroPCS, said Reuters.

So, what's a wireless carrier with 42.5 million subscribers to do? Well, a lot, actually.

As far as the business end of it goes, it's officially a reverse merger, with smaller, public, MetroPCS buying the privately owned T-Mobile USA. The deal, expected to close in the first half of 2013, will require regulatory as well as shareholder approval. The newly formed company will retain the T-Mobile name. Deutsche Telekom will take a 74% stake in the combined company, and MetroPCS will declare a one for two reverse stock split, and return $1.5 billion to its shareholders. T-Mobile's CEO Jon Legere will head up the organization. MetroPCS' CFO Braxton Carter will be CFO of the new, combined company.

News of the merger has caused a small yo-yo effect with MetroPCS' stock--shares rose 18% on Tuesday on reports of the pending merger, and fell 9.8% on Wednesday as realization of the technology challenges sank in.

Financially, the organization will face challenges, but Wall Street seems to like the idea so far. The numbers as reported by Reuters don't seem to be giving anyone a serious case of heartburn.

The challenges will come on the technology side, as the new T-Mo moves to shut down the MetroPCS network by 2015, post regulatory and shareholder approvals. Legere said the organization would even provide customers with financial incentives to make the technology move, if necessary.

You can count on this one getting approved, despite the tech hurdles. With Wall Street backing an increased subscriber base-bump of just over 9 million subscribers, spectrum, and a way for majority owner Deutsche Telekom to exit if necessary, a stronger, more-competitive fourth largest wireless option now exists in America. MetroPCS customers are mostly pre-paid.

With T-Mo wanting to get into that market and its willingness to provide incentives--read free or cheap, off-cycle phone upgrades--to existing MetroPCS customers, vacating the existing spectrum to make way for a larger LTE network will go relatively smoothly. Given the $2.4 billion T-Mo just got by dumping its cell towers, the spectrum from the failed AT&T merger as well as the LTE network and additional spectrum from the MetroPCS deal, the deal and pending network has legs.

Now: What do you think Sprint is going to do? Leave a comment below.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll