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.
- Keep the integrity of a discount carrier intact.
- MetroPCS has LTE spectrum that T-Mobile USA could use.
- More purchasing scale 43M customers (MetroPCS 9M + T-Mobile 34M)
- T-Mobile & MetroPCS have dead zone coverage gaps both can fill.
- Consumer friendly unlimited data plans would likely continue at both companies.
- Fewer competing customers on a network = less data congestion.
- Consumers might have the option of using a GSM or CDMA 3G phones.
- T-Mobile HSPA+ 4G is very fast and the network is not congested.
- MetroPCS 4G LTE is very fast and the network is not congested.
- 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.
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Where is MetroPCS Expanding Coverage?
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?
