The Merge: Tmobile and Metropcs

Topics: Mergers and acquisitions, Deutsche Telekom, Merge Pages: 2 (440 words) Published: October 23, 2012
The Merge: T-Mobile & Metro PCS

Two of the largest low-cost wireless providers, T-Mobile and Metro PCS, are preparing to merge into one single entity. The resulting birth of this technological union will be named, T-Mobile. So why the same name? Metro PCS has a meager 9.3 million customers while its counterpart T-Mobile has triple that amount with 33.2 million. It seems T-Mobile is muscling in on the competition. However, both companies have been struggling for some time. Profits from low-cost plans are barely keeping them afloat in an industry where evolving technology is vital for sustainability. Smart-phones continue to be the current and future cash crop of the cell phone industry. The best companies like AT&T, and Verizon offer reliable 4G network technologies, along with multimedia phones, that allow expeditious travel of data. Conversely, T-Mobile and Metro PCS are still operating on older network protocols and selling a lineup of smart-phones that are very lackluster when compared to the competitions iPhone, and Android. So how is this all going to work? According to industry analysts, Metro PCS will be giving 1.5 billion to its shareholders and performing a 1-for-2 reverse split of its stock. This allows any outstanding shares to be halved and doubled in value. Meanwhile, all of T-Mobile USA's assets will be bought out by German telecommunications company Deutche Telekom. Inherently giving D.T. control of the combined companies by providing financial support through credit and debt offerings. This complex migration will be expensive, risky, and seamless. Customers of T-Mobile and Metro PCS have incompatible networks. Meaning, no two phones from either company can operate on one single network. This infrastructure obstacle could hamper a successful outcome and leave investors, and executives blowing in the wind. Back in 2005, Sprint and Nextel merged under similar circumstances and ultimately failed. It was considered one of the...
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