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A MetroPCS (NYSE: PCS) and T-Mobile USA owned by Deutsche Telekom (NYSE: DTEGY) merger makes a lot of sense for the following reasons.  Here are 10 reasons this would be good for consumers.  
  1. Keep the integrity of a discount carrier intact.  
  2. MetroPCS has LTE spectrum that T-Mobile USA could use.
  3. More purchasing scale 43M customers (MetroPCS 9M + T-Mobile 34M)
  4. T-Mobile & MetroPCS have dead zone coverage gaps both can fill.
  5. Consumer friendly unlimited data plans would likely continue at both companies. 
  6. Fewer competing customers on a network = less data congestion.
  7. Consumers might have the option of using a GSM or CDMA 3G phones.
  8. T-Mobile HSPA+ 4G is very fast and the network is not congested.
  9. MetroPCS 4G LTE is very fast and the network is not congested.
  10. MetroPCS has been very aggressive using femtocell and DAS to improve coverage.
Deutsche Telekom is considering a stock swap transaction. However, I would support raising more capital in a T-Mobile USA IPO after the acquisition. MetroPCS shares jumped almost 30% instantly on the deal and currently has a market capitalization of around $3 billion.  MetroPCS seems to have plenty of cash in the bank of $2B and has annual revenue of approximately $5B.  So the combination would appear to be a strategy combining entities to have more scale for handset purchasing and spectrum allocation.  Considering the closest competitor is AT&T and Verizon who each have 90 to 100M+ subscribers.

MetroPCS has began deploying their LTE network before Verizon. MetroPCS is currently built around a CDMA 3G voice network and would be incompatible with T-Mobile’s GSM/HSPA network. However, in the future T-Mobile could use MetroPCS's LTE channels.  Reuters reported in an article "MetroPCS and T-Mobile are not a good technological or customer fit, one analyst said".   MetroPCS is a CDMA carrier in 3G and T-Mobile is a GSM carrier.  However, LTE is LTE and new handsets should be cross carrier compatible if the industry does the consumers right.

A combination of Leap Wireless 7M subscribers also makes sense in the future but right now LTE spectrum is more important to T-Mobile I would bet.

Related Articles:
Where is MetroPCS Expanding Coverage?

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