Telecom Lead America: T-Mobile USA is in talks to buy smaller MetroPCS Communications.
The proposed acquisition is aimed at adding valuable spectrum in the highly competitive U.S. wireless industry.
Deutsche Telekom, the German company that owns T-Mobile USA, and MetroPCS have confirmed the initial talks.
T-Mobile USA, the country’s fourth-largest cellphone company, has 33.2 million subscribers.
MetroPCS has around 9.3 million subscribers and it is in 5th position.
The acquisition will not enable T-Mobile USA to compete with telecom majors such as Verizon Wireless and AT&T. Both Verizon and AT&T are aggressively spending on LTE infrastructure. T-Mobile and MetroPCS will look at 4G as a growth area.
Last year, T-Mobile USA’s move to merge with AT&T in a deal valued at $39 billion did not take off due to regulatory issues.
According to a report in AFP, regulatory concerns will be much milder over a T-Mobile-MetroPCS combination. Both companies are relatively small, T-Mobile USA has been losing subscribers for the last two years.
The acquisition will be complicated by the fact that MetroPCS and T-Mobile USA use different network technologies. MetroPCS phones will not work on T-Mobile USA’s network, and vice versa. However, both companies are deploying 4G technology, so they’re on a path to harmonizing their networks.
There had been speculation that Sprint would buy MetroPCS. If the T-Mobile deal is consummated, Sprint would instead face tougher competition, particularly in the market for cheap, no-contract prepaid service.
T-Mobile USA and MetroPCS could generate cost savings worth $1.2 billion to $1.7 billion a year.
According to a Bloomberg report, a deal with MetroPCS will be the latest attempt by Deutsche Telekom CEO Rene Obermann to revive T-Mobile’s fortunes more than a decade after the German company entered the U.S. market. T-Mobile USA accounts for about 25 percent of Deutsche Telekom’s revenue as the parent struggles to return to growth in eastern European countries such as Greece.
T-Mobile USA, the fourth-largest U.S. carrier, has lost 2.76 million contract customers, or more than 10 percent of its subscriber base, in the eight quarters through June.
(The pix for the article is sourced from talkandroid.com)