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T-Mobile Merges With MetroPCS

T-Mobile USA parent company Deutsche Telekom will pay $1.5 billion in cash to MetroPCS shareholders, plus 26 percent ownership in the new company. Deutsche Telekom will hold the remaining 74 percent.

Deutsche Telekom confirmed the deal early Wednesday and said that it intends to continue its strategy to position the company, which will retain the T-Mobile brand, as a value carrier in the U.S. market. The merger provides Deutsche Telekom with a partial solution to solve the problem of T-Mobile's high customer churn and enable a path toward LTE deployment for its subscribers. According to a statement, the combination of T-Mobile and MetroPCS spectrums will create a "path to at least 20x20 MHz of 4G LTE in many areas."

While such an acquisition will not give T-Mobile an opportunity to compete with AT&T and Verizon, it may have a much better position to challenge Sprint Nextel, which had 56 million subscribers at the end of the second quarter. 42.4 million subscribers are estimated to give the combined T-Mobile USA about $42.8 billion in revenue for the fiscal year of 2012.

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