T-Mobile Confirms Plans to Merge With MetroPCS

The rumors are true. T-Mobile and MetroPCS this morning confirmed that they will combine forces.

T-Mobile's parent company, Deutsche Telekom, announced that it has signed an agreement to "combine" T-Mobile and MetroPCS. "This transaction will create the leading value carrier in the U.S. wireless marketplace, which will deliver an enhanced customer experience through a wider selection of affordable products and services, deeper network coverage and a clear-cut technology path to one common LTE network," Deutsche Telekom said in a statement.

The boards of Deutsche Telekom and MetroPCS have approved the transaction. Under the deal, MetroPCS will make a cash payment of $1.5 billion to its shareholders for a 26 percent ownership in the combined company; Deutsche Telekom will own 74 percent.

When the deal is complete, the combined firms will be known simply as T-Mobile, though Deutsche Telekom said it will operate T-Mobile and MetroPCS as separate customer units, led by Jim Alling, currently COO of T-Mobile, and Thomas Keys, currently president and COO of MetroPCS.

John Legere, the new CEO of T-Mobile, will serve as the president and CEO of the combined firm. J. Braxton Carter, now CFO and vice chairman of MetroPCS, will be CFO.

Company headquarters will be in Bellevue, Washington though it will "retain a significant presence" in Dallas, Texas.

The firms said the combined company will have about 42.5 million subscribers.

"The T-Mobile and MetroPCS brands are a great strategic fit – both operationally and culturally," René Obermann, CEO of Deutsche Telekom, said in a statement. "The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network. We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment."

"MetroPCS and T-Mobile have the same network strategies and LTE networks in the same spectrum bands, which we believe will accelerate the deployment of advanced services to our customers," said Roger D. Linquist, chairman and CEO of MetroPCS. "Ultimately, this combination will create a stronger wireless provider nationally with broader value offerings to better serve our combined customers and drive shareholder value."

MetroPCS and T-Mobile did not mention specific post-merger wireless plans or devices, except to say that the combined firms will offer "a wider selection of attractive, competitively priced plans to better serve the marketplace, including contract, no-contract monthly, SIM-only, pay-as-you-go and mobile broadband services."

The companies expect the deal to close in the first half of 2013, subject to regulatory approval. The merger is not likely to face the same scrutiny that AT&T and T-Mobile were subjected to last year during their merger efforts given that a combined T-Mobile/MetroPCS will not create as big a wireless behemoth as a combined AT&T/T-Mobile.

Sprint and Verizon declined to comment on the deal.

Back in February, to roll out its 4G LTE network in 2013, thanks in part to the Advanced Wireless Services (AWS) spectrum from the failed AT&T merger deal as well as a $4 billion investment.

The effort has been dubbed T-Mobile's "Challenger Strategy" and is expected to reach the "vast majority" of the top 50 markets. The carrier has been installing new equipment at 37,000 cell sites and refarming spectrum in preparation for the LTE launch.

Recently, the Federal Communications Commission T-Mobile and Verizon Wireless will purchase and swap spectrum in the AWS band.

MetroPCS was the 4G LTE in the U.S. back in September 2010 via the phone. Recently, the first commercially available Voice Over LTE (VoLTE) service in the U.S. and a new handset that will support it. For more, see .

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