T-Mobile's merger with MetroPCS passes key hurdle
T-Mobile USA is drawing closer to finishing its merger with MetroPCS Wireless as a deadline for action by the U.S. Department of Justice passed on Tuesday.
T-Mobile agreed last October to merge with the smaller MetroPCS, forming a larger No. 4 national carrier in the U.S. and one better able to build out an attractive LTE network. U.S. antitrust law dictates a waiting period for such deals to allow time for DOJ review. That waiting period ended on Tuesday without the DOJ acting to block the merger.
The proposed deal is still subject to other regulatory approvals, including from the U.S. Federal Communications Commission. MetroPCS shareholders also need to pass the proposal. But the passing of the waiting period is good news for the two carriers.
The would-be partners aren’t expected to face much legal backlash against their plan, because it would create a stronger rival to the two big carriers that dominate the U.S. market, AT&T and Verizon Wireless. The idea of T-Mobile teaming up with a smaller player is a far cry from the merger with T-Mobile that the much larger AT&T proposed in March 2011. AT&T finally dropped that plan after strong opposition from the DOJ and the Federal Communications Commission. Critics said that deal would have hurt competition.
On Tuesday. MetroPCS said it expects the deal with T-Mobile to close shortly after a special meeting of MetroPCS shareholders on April 12. Once the deal is final, T-Mobile is expected to start converting 3G cell towers and phones for MetroPCS, which are based on CDMA, to T-Mobile’s GSM-based technology. That process is likely to take until the end of 2015. Though both companies are migrating toward newer LTE technology, a 3G network will still be needed for wide coverage and voice calls for some time.
Joining forces with MetroPCS will boost T-Mobile’s subscriber count from 33 million to 42 million, the companies said at the time of the merger deal. It would remain the fourth-largest U.S. carrier by subscribers, after AT&T, Verizon and Sprint Nextel. The expanded T-Mobile will continue to focus on value for money, emphasizing low-cost, no-contract and unlimited data plans.