T-Mobile Agrees to Merger with MetroPCS

Posted on Oct 3 2012 - 1:27pm by Jamie Hacking

The no. 4 wireless carrier in the U.S., T-Mobile has announced it will merge with MetroPCS in a deal worth over $1.5 billion, which will create the leading value wireless carrier in the country.

The deal has been structured as recapitalization, where MetroPCS will declare a reverse stock split of 1 for 2, make a $1.5 billion cash payment to shareholders and acquire capital stock of T-Mobile in its entirety, by issuing 74% of MetroPCS common stock to its parent company Deutsche Telekom.

This means that 26% of the new business will be owned by shareholders of MetroPCS and the remaining 74% will be in the hands of Deutsche Telekom, which rebuffs rumors that the German behemoth was looking to exit the wireless market in the U.S.

T-Mobile will remain as the name of the new company and its headquarters will be in Bellevue, Washington, with a large presence in Dallas. The stock will continue to trade on NYSE and John Legere, the T-Mobile CEO and president will maintain his title with the new business, which will operate both brands separately.

The merger, said the companies, will offer expanded network coverage, a broader selection of products and a technology path that is clear-cut to one LTE Network.

The announcement by the two wireless carriers comes only one year after AT&T failed in its bid to acquire T-Mobile.

For a long time T-Mobile has targeted the lower end of the market in wireless communications. It has regularly undercut prices of rivals and pushed out new smartphones attempting to attract customers away from competitors.