MOBILE OPERATOR Deutsche Telekom has inked a $1.5bn merger deal with MetroPCS in the US and to create a common long term evolution (LTE) network.
After AT&T's botched attempt to buy Deustche Telekom's T-Mobile USA operations, the German mobile operator decided it was better off going for low hanging fruit. The firm announced a $1.5bn deal to buy rival low-cost mobile operator MetroPCS that will create a firm that has 42.5 million subscribers.
According to Deutsche Telekom the deal will help the two firms expand LTE deployment, with MetroPCS saying its existing customers will be migrated over to the combined LTE network after upgrading their handsets. Unlike Deutsche Telekom's deal with Orange in the UK, the combined US company will retain T-Mobile's branding.
John Legere, president and CEO of T-Mobile said, "Our enhanced spectrum position will be the foundation for a faster and more reliable network, and will allow us to deploy a deeper and more robust LTE rollout, particularly in major metropolitan areas. We will be a stronger, value-focused competitor, providing customers with offerings such as our Unlimited Nationwide 4G Data and 'bring your own device' plans. These features, along with our ability to react with greater speed and effectiveness to customer and market opportunities, will deliver value to our customers, business partners, employees and shareholders."
Deutsche Telekom's argument for the merger is similar to what AT&T said in its multi-billion dollar bid for T-Mobile USA. However, unlike AT&T, MetroPCS is a significantly smaller player in the market and therefore this deal has a better chance of getting regulatory approval. MetroPCS' shareholders also have to approve the deal even before government regulators get to judge whether consumer choice will be harmed too much by a large mobile operator swallowing another smaller one. µ