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MetroPCS, T-Mobile merger creates 4th largest US cellphone company

Deutsche Telekom will have 76% stake in merged T-Mobile, MetroPCS company.

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A T-Mobile store is seen at 7th Avenue and 49th Street on March 23, 2012 in New York City. T-Mobile purchased MetroPCS on October 3, 2012 to form the fourth-largest US wireless company. (Andrew Burton/AFP/Getty Images)

A combined MetroPCS and T-Mobile creates a “value leader in wireless,” but analysts suggest there’s still work ahead to challenge America’s largest cellphone companies.

T-Mobile’s owners, Deutsche Telekom, and MetroPCS announced a $1.5-billion deal today that gives the German company a 76 percent stake in the partnership between low-cost cell companies.

Deutsche Telekom CEO René Obermann said the merger gives T-Mobile a greater foothold in the expanding US wireless market.

“The T-Mobile and MetroPCS brands are a great strategic fit – both operationally and culturally,” Obermann said.

“The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network.”

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The new company retains the T-Mobile name.

Based on estimates for 2012, the combined company is expected to have about 42.5 million subscribers, $24.8 billion of revenue, $6.3 billion of adjusted earnings (EBITDA), $4.2 billion of capital expenditures and $2.1 billion of free cash flow (defined as EBITDA less capital expenditures) in 2012.

That puts the new T-Mobile fourth behind Verizon, AT&T and Sprint, the Los Angeles Times reported.

Despite having unique cellular hardware, the two companies had both made moves toward the 4G-LTE network.

That means existing customers will remain with their old companies for now until they moved over the 4G, CNN said.

AT&T tried to purchase T-Mobile last year for $36 billion, but regulators blocked the sale.

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http://www.globalpost.com/dispatch/news/business/121003/metropcs-t-mobile-merger-creates-4th-largest-us-cellphone-company