T-Mobile USA Prepares to Pounce on MetroPCS

October 3rd, 2012 by · 2 Comments

With the tw telecom rumor now receding somewhat into waiting mode, we have another merger rumor in the telecom world, this time it’s in wireless and it has teeth. T-Mobile is apparently poised to pounce on its smaller rival MetroPCS, looking to rejuvenate their US presence with an existing, if small, LTE buildout already in place. Both companies have apparently acknowledged the talks now.

There are both benefits and drawbacks to this combination. On the positive side, the AWS spectrum is very complementary and their combined LTE buildout would be enhanced. Also, T-Mobile could use it as a way to a US stock listing, giving DT some separation. But on the negative side is the incompatibility of the underlying 3G networks: T-Mobile’s GSM and MetroPCS’s CDMA networks make for a difficult integration.  The same issues have been held up as the reason why Sprint and T-MobileUSA haven’t found a way to merge despite multiple dances.

But a merger with MetroPCS probably can’t be seen as the endgame. One would have to think that T-Mobile wouldn’t make this jump unless there is more to come, either inorganically or via partnerships.  There is more action to come at the low end of the LTE spectrum, with Sprint, Clearwire, Leap, CSpire, and DISH all looking for the right angle.  Even LightSquared recently fired a volley in an FCC filing recently trying to bring its spectrum back into the game.

T-Mobile supposedly decided against a move just like this earlier this year, so what’s changed?  Possibly the new CEO at the top has something to do with it, with John Legere planning a swift change in direction.

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Categories: Mergers and Acquisitions · Wireless

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