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T-Mobile USA and MetroPCS to Merge

MetroPCS and T-Mobile USA have agreed to merge. The deal is expected to close in the first half of 2013, subject to regulatory and shareholder approval. The combined company will be called T-Mobile and will trade under MetroPCS' current stock symbol, PCS. MetroPCS and T-Mobile will continue to operate as separate brands and business units within the new company. 

MetroPCS has 9 million customers and T-Mobile 33 million giving the combined company 42 million and bringing it closer to Sprint's 55 million. 

According to T-Mobile CEO John Legere, the deal will make the new company the largest US prepaid operator in terms of revenue at $1.6 billion annually, ahead of Sprint's 1.2 billion and Tracfone's $1 billion. In number of prepaid subscribers, the new company moves from six place to third with 14.76 million customers, behind Sprint's 15.4 million and Tracfone's 21.3 million.

Both companies use the 1700 Mhz and 1900 Mhz bands. The merger dovetails nicely with T-Mobile's current initiative to move its 3G HSPA+ operations from 1700 Mhz to 1900 Mhz and to use the 1700 band for 4G LTE.

In a conference call to investors this morning. T-Mobile CTO Neville Ray said that as soon as the deal closes, MetroPCS will begin selling phones that operate on T-Mobile's GSM/HSPA+ technology. By the end of 2015, T-Mobile expects to be able to shut down MetroPCS's CDMA network after moving current Metro customers to HSPA+ phones. That seems like a very aggressive schedule and I have doubts that the shutdown of CDMA will occur that quickly.

I believe this deal is a good one for customers. It appears to give T-Mobile enough spectrum to refarm 3G to 1900 Mhz in most areas, which will allow unlocked AT&T and most other GSM phones to get hi-speed data. And it provides ample spectrum for fast, high capacity LTE network in key metropolitan markets like New York, Los Angeles, San Francisco and Dallas.

The merger puts increased pressure on Sprint and Cricket which may lead to a merger between those two companies.

For more about the merger, the Wall Street Journal's All Things D seems to have the best coverage including a transcript and charts and graphs from the investors conference call.

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  1. They will need to be very aggressive on pricing, otherwise they will be wiped out by Verizon and AT&T, which already drastically lowered prices on prepaid plans.

    1. AT&T and Verizon's prepaid plans haven't changed. AT&T just introduced a new $65 unlimited talk, text, and 1GB of data. Which is to compete against Verizon's $80 plan. So truly nothing has changed. Even the basic phone unlimited plan for both companies are still the same. So why should T-Mobile or Metro should have to change their plans? Metro and T-Mobile prepaid may not offer top quality 4G. But at least they offer unlimited compared having to purchase extra data or pay per MB.

  2. I don't know what to say. AT&'s deal fell through. So what changes now? Better coverage for Metro? LTE coverage for T-Mobile? What really? Sprint almost had a crack at Metro. But they backed out. So hopefully now this will improve Metro's network.

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