T-Mobile USA set to merge with MetroPCS
BERLIN (AP) - Struggling cellphone companies T-Mobile USA and MetroPCS Communications are set to merge, in a deal that will create an operator with more than 40 million subscribers.
In a joint statement, the two companies said Wednesday that Deutsche Telekom AG, the owner of T-Mobile USA, will hold 74 percent of the new business, while MetroPCS's shareholders will hold the remainder, as well as receiving a payment of about $1.5 billion.
"The combined company, which will retain the T-Mobile name, will have the expanded scale, spectrum and financial resources to aggressively compete with the other national U.S. wireless carriers," the two said.
Both companies have struggled in the highly-competitive U.S. cellphone market.
And even after the combination with Dallas-based MetroPCS, which has 9.3 million subscribers, T-Mobile USA - the country's fourth-largest cellphone company with 33.2 million subscribers - will still trail the market's No. 3, Sprint Nextel Corp.
However, the deal would give T-Mobile USA, which is based in Bellevue, Washington, access to more space on the airwaves, a critical factor as cellphone carriers try to expand their capacity for wireless broadband.
Last year, AT&T struck a deal to buy T-Mobile USA for $39 billion for much the same reason. That was shot down by regulators, who believed competition would suffer if the second-largest cellphone company were to gobble up the fourth-largest.
"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," Deutsche Telekom chief executive officer Rene Obermann said.
Deutsche Telekom said the combined company would have revenues of around $24.8 billion based on analysts' estimates, and cost synergies are expected to be worth $6 to $7 billion.
The deal still has to be agreed by shareholders and will require regulatory approval.
The regulatory concerns this time round appear set to be much milder than the proposed deal involving AT&T. Both companies are relatively small, and T-Mobile USA has been losing subscribers for the last two years.
A linkup would be complicated by the fact that MetroPCS and T-Mobile USA use different network technologies. That means MetroPCS phones would not work on T-Mobile USA's network, and vice versa. However, both companies are deploying the same "fourth-generation" or "4G" technology, so they're on a path to harmonizing their networks.
Deutsche Telekom's CEO Obermann said the new company will have the "resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network."
Germany's stock market was closed Wednesday because of a national holiday. But the prospect of seeing Deutsche Telekom finding a solution for its struggling U.S. business sent the stock higher Tuesday after both companies had confirmed their talks.
MetroPCS' shares shot up some 20 percent to $14.16 in New York on Tuesday.
In a joint statement, the two companies said Wednesday that Deutsche Telekom AG, the owner of T-Mobile USA, will hold 74 percent of the new business, while MetroPCS's shareholders will hold the remainder, as well as receiving a payment of about $1.5 billion.
"The combined company, which will retain the T-Mobile name, will have the expanded scale, spectrum and financial resources to aggressively compete with the other national U.S. wireless carriers," the two said.
Both companies have struggled in the highly-competitive U.S. cellphone market.
And even after the combination with Dallas-based MetroPCS, which has 9.3 million subscribers, T-Mobile USA - the country's fourth-largest cellphone company with 33.2 million subscribers - will still trail the market's No. 3, Sprint Nextel Corp.
However, the deal would give T-Mobile USA, which is based in Bellevue, Washington, access to more space on the airwaves, a critical factor as cellphone carriers try to expand their capacity for wireless broadband.
Last year, AT&T struck a deal to buy T-Mobile USA for $39 billion for much the same reason. That was shot down by regulators, who believed competition would suffer if the second-largest cellphone company were to gobble up the fourth-largest.
"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," Deutsche Telekom chief executive officer Rene Obermann said.
Deutsche Telekom said the combined company would have revenues of around $24.8 billion based on analysts' estimates, and cost synergies are expected to be worth $6 to $7 billion.
The deal still has to be agreed by shareholders and will require regulatory approval.
The regulatory concerns this time round appear set to be much milder than the proposed deal involving AT&T. Both companies are relatively small, and T-Mobile USA has been losing subscribers for the last two years.
A linkup would be complicated by the fact that MetroPCS and T-Mobile USA use different network technologies. That means MetroPCS phones would not work on T-Mobile USA's network, and vice versa. However, both companies are deploying the same "fourth-generation" or "4G" technology, so they're on a path to harmonizing their networks.
Deutsche Telekom's CEO Obermann said the new company will have the "resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network."
Germany's stock market was closed Wednesday because of a national holiday. But the prospect of seeing Deutsche Telekom finding a solution for its struggling U.S. business sent the stock higher Tuesday after both companies had confirmed their talks.
MetroPCS' shares shot up some 20 percent to $14.16 in New York on Tuesday.
Consumers should rejoice at this merger. It will result in better mobile coverage and cheaper rates. This is the same as when banks merged 10 years ago. They combined into a few large banks that were "too big to fail". Customers are the winners because now we have no ATM fees, no outlandish account service fees and customer service satisfaction rates are at an all time high.Yes, mergers are always good because the "free market" always works in favor of the consumer.  When corporations have less regulation and oversight consumers always win.Â
 @Komo TV I have to disagree, customer satisfaction is at an all time high?  Also, 'too big to fail' in reference to banks? Didn't they fail just a few years ago and need massive bailouts from the government to continue business?
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In regards to banks, I'll have to assume all of your statements were sarcastic, otherwise they were too outlandish to believe.
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In regards to T-mobile and MetroPCS merger, that I believe is a good deal. Â T-Mobile needs to be able to compete with the top 3.
I wonder if this means Tmobile will go back to limited data. They keep going back and forth between unlimited data, throttled unlimited data, and limited data. They need to figure it out or else keep losing customers to Sprint.
I've had a T-Mobile account for the past year and 2 months or so, and we got that $99.99/month for Unlimited Text/Talk/Data (Up to 2gb), and I suppose I should have read the fine print more carefully. It was an in-store only deal, apparently it's an account that you can never upgrade from (While under contract), as well as cannot upgrade your phone after any given time as well (You have to pay full price, much like pre-paid phone plans). Service wise, the Verizon 3G plan that I had was much faster than my supposed 4G T-mobile that I currently have, dropped calls, full bars on phone yet still won't go through for internet or calls, etc. Â Needless to say, when either my contract gets closer to the 2 year mark, or when it is up fully, I am switching to another carrier. T-mobile also won't tell you that they will raise the prices of parts of the contract without telling you either.Â
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What started as a 99.99/month plan for 2 lines is now a $119.99 plan (Without our knowledge) on our bill, as they phased out the 99.99 a month thing in their system with the new unlimited packages I guess. Sadly, with the plan we have, I still end up paying $180 or so a month for some odd reason after taxes and fees.
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I miss Verizon! Â -_-
I've been on T-mobile for at least 7 years, probably closer to 10, and they have never raised my rate once that I recall. Interesting that you are having such a different experience. I find T-mobile to be the least expensive of most cell phone companies out there, and the only place I have had issues with reception is my home (live in the sticks), otherwise I rarely, if ever get dropped calls.
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That being said, I've been looking at Straight Talk and am thinking about switching to them. A friend of mine has been on it for a year now & loves it. He has no reception issues and Straight Talk is a flat $45/mo (includes taxes!) for unlimted phone/text/internet.Â
 @Shelly Straight Talk is pretty much a reseller of T-Mobile and sometimes AT&T.
T-Mobile is ridiculous. EVERY person i know that has them as a carrier experiences dropped calls (multiple times on a daily basis). They miss calls and when on the phone it cuts out or the connection makes strange noises. I thought it was just my friends phone but after talking to like 10 people it's T-Mobile that's the problem. Absolutely BS, it's robbery seriously! How does this company get away with having such terrible service? This isn't 2006 anymore.
 @SwishasNKush You must live in the middle of nowhere. I've never had a dropped call with T-mobile or AT&T. Although I did get a "all circuits are busy" message for 20 minutes while trying to place a call at King Street Station on the Friday before Labor Day. But other than that, no dropped calls.
 @SwishasNKush Like any network, there are issues. But for me, I have had a great relationship with the T. 2 times in the past two contracts, we hit some dropped text/network bugs - and they solved both of the within a couple of days, and credited me time.
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Fair practice.
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Everyone has different experiences, I know, but mine has been positive. Plus I get an employee discount through my company.
@SwishasNKush I believe what you say, but I've never had an issue with dropped calls with T-mobile, unless I'm at my house which is in a remote area. I've had positive experiences with their customer service as well. I'm surprised to read the complaints in this comment forum. Perhaps I've just been lucky.
 @Shelly  @SwishasNKush Same here, no problems in over five years.
As a T-Mobile customer, I like this deal way better then that AT&T nightmare that almost occurred.