NEW YORK (AP) — Wall Street gave T-Mobile US Inc., the new-born combination of T-Mobile USA and MetroPCS, a warm welcome on its first day of trading.
The stock was at $16.45 in midday trading Wednesday, up 87 cents, or 5.5 percent, from the value of MetroPCS shares at Tuesday's close. That suggests the combined company is attracting new investor interest.
The deal was structured as a reverse merger. The larger T-Mobile USA, which was a wholly owned subsidiary of Germany's Deutsche Telekom AG and thus lacked its own stock listing, was "acquired" by the smaller MetroPCS Communications Inc. and inherited its stock listing. However, Deutsche Telekom owns 74 percent of the new, combined company.
The stock is trading under a new ticker symbol, "TMUS," on the New York Stock Exchange.
Goldman Sachs analyst Matthew Niknam started coverage on Wednesday with a "Buy" rating and a $22 price target. Deal-making in the U.S. wireless industry is at a fever pitch, and Niknam believes Deutsche Telekom would be willing to sell its stake in the company.
AT&T Inc. tried to buy T-Mobile USA in 2011 with an offer much higher than the current market value, but the deal fell through because of opposition from regulators. Satellite-TV company Dish Network Corp. last month launched an unsolicited bid for No. 3 wireless carrier Sprint Nextel Corp., but Sprint has already agreed to sell to Softbank Corp. of Japan. There is speculation that T-Mobile could be Dish's next target, if the Sprint offer is rebuffed.
T-Mobile, the No. 4 U.S. cellphone carrier, is adding 9 million MetroPCS customers to its own 34 million. The combined company will still lag No. 3 Sprint Nextel Corp. in size.
No immediate changes are expected for customers of either company, and T-Mobile plans to keep the "MetroPCS" brand. Over the next two years, however, the company will shut down MetroPCS's network, which means MetroPCS phones will eventually stop working. T-Mobile will use the space freed up on the airwaves to boost its own coverage and data speeds.