Deutsche Telekom, parent of T-Mobile USA has confirmed ongoing discussions with MetroPCS regarding a purchase of the Dallas-based company with board members from each respective carrier set to meet tomorrow morning in order to finalize the transaction. MetroPCS has also released a statement confirming the discussions, but has refused to comment further until tomorrow’s meeting.
“MetroPCS today confirmed that it is in discussions with Deutsche Telekom regarding an agreement to combine T-Mobile USA and MetroPCS. There can be no assurances that any transaction will result from these discussions, and the Company does not intend to comment further unless and until an agreement is reached.”
Deutsche Telekom has released its own statement on the discussions:
“Deutsche Telekom is holding talks with the listed company MetroPCS with the aim of operating its subsidiary T-Mobile USA and MetroPCS within one company in which Deutsche Telekom would hold the majority of shares.” “The talks are at a stage where significant issues have not yet been finalized, contracts have not yet been signed and the conclusion of the transaction is still not certain.”
The purchase of MetroPCS by T-Mobile USA heavily favors T-Mobile as the carrier seeks the nationwide spectrum necessary to rollout its forthcoming LTE network, scheduled for rollout in 2013 on the AWS band it currently uses for 3G service while transitioning that service to its PCS band primarily for iPhone users. As T-Mobile prepares to undertake the LTE buildout, the MetroPCS purchase would shore up any missing spectrum holdings for the nationwide rollout that would add to its existing holdings.
For MetroPCS, the purchase would essentially render its CDMA network dead in the water, while it’s current LTE network would be the main reason for the T-Mobile purchase and the ongoing LTE service expansion would be completed before the integration of the company would be complete. Customers would also benefit by being able to migrate to T-Mobile service while the transition takes place and would instead be able to take advantage of actual coverage without the outdated and arcane roaming issues currently experienced by customers.
The purchase would be a net gain for T-Mobile and Deutsche Telekom while MetroPCS is consolidated into a much larger and sustainable enterprise, which has a been a major issue for MetroPCS execs as it sought to find ways to improve the carrier’s stature with LTE service and the forthcoming launch of its Samsung Galaxy S III variant was to signal the beginning of a new era by carrying a major flagship device along with the major carriers, instead of remaining reliant on heavily customized devices and cast offs from larger carriers.
Time will tell whether T-Mobile’s gamble to buy MetroPCS will payoff, as it has much to gain, but as the lessons from the Sprint Nextel merger and the ultimately failed AT&T merger prove, anything that can go wrong, will go wrong, and both sides have to be prepared for anything that pops up, good or bad.