As many expected, this morning T-Mobile USA and MetroPCS have announced a merger via stock transfer, with MetroPCS transferring 74% of its stock to T-Mobile USA parent Deutsche Telekom via reverse stock split while issuing a future cash payment to its stockholders at a premium of $4.09/share totaling $1.5 billion.
This means that MetroPCS will purchase one share of T-Mobile USA capital stock for every two shares of common MetroPCS stock totaling 74% of outstanding common shares, with MetroPCS owning 26% of the new company and Deutsche Telekom owning 74% while slowly reducing its equity stake over the next few years. Deutsche Telekom will also assume all of T-Mobile USA’s debt load while providing the newly merged entity with a $500 million credit line.
The new company will remain under the T-Mobile name and retain its current executive leadership and will expand its presence in Dallas outside of T-Mobile’s regional campus in Frisco TX while retaining its Bellevue corporate headquarters. Both carriers will retain their respective retail presence as separate brands despite being operated as one corporate entity, with LTE being the main focus for the network and customer transition going forward for both brands, with no immediate changes to service for either T-Mobile or MetroPCS customers.
The newly combined corporate entity will be able to roll out LTE on 20x20MHz paired spectrum with the combination of identical assets in select markets and will be using all of the current MetroPCS infrastructure as well as T-Mobile’s planned deployment to do so while expanding LTE service on an actual nationwide level. Essentially, the reverse merger revolves around the merging of LTE assets for future deployment.
The transaction, provided the final terms are approved by the respective board of directors and shareholders is expected to close by the first half of next year, with no DoJ/FCC roadblocks expected. In terms of customer volume, the newly combined company will feature 42 million customers, with the majority coming from the former T-Mobile USA and 9 million from MetroPCS. The key points as delivered by T-Mobile follow below:
· Leverage a faster, stronger and more reliable network to provide amazing 4G services. We’ll have unsurpassed speed and reliability through a denser, higher-capacity network and deeper LTE coverage in key metropolitan areas such as New York, Los Angeles and Dallas.
· Provide customers more choices, including an expanded selection of affordable products and services, such as contract, no-contract monthly, SIM-only, pay-as-you-go and mobile broadband, and our most compelling line up of devices – phones, tablets, hot spots, or other future networked devices.
· Offer bold, compelling and unique 4G plans including T-Mobile’s Unlimited Nationwide 4G and MetroPCS’s 4G for All.
· Offer a superior customer experience to more subscribers in more metro areas through more than 70,000 customer service points.
In the meantime, T-Mobile and MetroPCS will continue to operate as separate companies. After closing, T-Mobile will be a separate customer unit of the combined company.