T-Mobile Looks to Buy MetroPCS

The following is an excerpt from an article in:


The New York Times
Wednesday, October 03, 2012

T-Mobile Looks to Buy MetroPCS

By MICHAEL J. DE LA MERCED

The parent company of T-Mobile USA, the struggling cellphone service provider, is in talks to buy MetroPCS as it fights to compete against two bigger rivals.

A deal would be the latest chapter in an industry that has rapidly consolidated to a handful of major players. It would come after last year's aborted attempt by AT&T to buy T-Mobile for $39 billion, an ambitious move thwarted by government antitrust regulators.

Both T-Mobile's parent, Deutsche Telekom, and MetroPCS confirmed on Tuesday that they were in talks. A deal could be announced as soon as Wednesday, according to people briefed on the matter, who cautioned that final moves could derail an agreement.

Any possible transaction would most likely involve a stock swap, leaving Deutsche Telekom with a significant stake in a newly public T-Mobile.

Shares in MetroPCS climbed nearly 18 percent on Tuesday, to $13.57. That valued the company at $4.93 billion.

In recent years, AT&T and Verizon Wireless have seized increasingly bigger portions of the American cellphone market; together, they claim to have more subscribers than their next six competitors combined. Though a merger would not put the subscriber base of T-Mobile and MetroPCS anywhere near the two largest carriers, it would make the combined company a stronger competitor.

T-Mobile and its larger rival, Sprint Nextel, have both sought customers seeking lower-cost plans. Both have also raced to build their next-generation data networks to better service newer smartphones, like the Samsung Galaxy S III.

But T-Mobile has fallen well behind Sprint in its fight for users. As of midyear, the company claimed about 33.2 million customers, compared with Sprint's 56 million. It still does not offer the AppleiPhone, which has deprived it of subscribers with higher-price data plans.

T-Mobile also lost 205,000 subscribers in its second quarter of this year, quadruple what it reported a year ago.

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