Mobile Deals: T-Mobile, MetroPCS to merge

T-Mobile has continued to lose customers to its larger competitors, notably AT&T and Verizon Wireless. Over the past 8 quarters the company lost about 2.8 million contract customers -- more than 10 percent of its subscriber base.

There are 3,100 T-Mobile branded stores in the U.S.
There are 3,100 T-Mobile branded stores in the U.S.

T-Mobile, the fourth largest carrier in the US (following AT&T, Verizon, Sprint) with 34 million customers, will merge with its smaller competitor MetroPCS. The announcement comes closely after AT&T’s failed $39 billion takeover bid of T-Mobile in 2011.

Deutsche Telekom AG will own 74% of T-Mobile USA when the deal consumates, while MetroPCS shareholders will receive over $1.5 billion in cash.

According to analysts, the combined company will revenue of $24.8 billion and 42 million subscribers.

“The two companies, being smaller players, have struggled to compete,” said David Heger, an analyst at Edward Jones & Co. “Being a larger player, you might be able to gain access to some of the more popular handsets. You might also see some network cost benefits.”

T-Mobile has continued to lose customers to its larger competitors, notably AT&T and Verizon Wireless. Over the past 8 quarters the company lost about 2.8 million contract customers —  more than 10 percent of its subscriber base.

One stumbling point is T-Mobile’s lack of access to Apple’s white-hot iPhone. Unable to compete with the latest mobile handset has forced the carrier to focus on price, including a range of low-cost Android-based handsets.

For now it appears that the new entity will operate the T-Mobile and MetroPCS as separate divisions.

The deal is still subject to shareholder and regulator approval.

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