T-Mobile USA to merge with MetroPCS

Associated Press Published: October 3, 2012
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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.

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