T-Mobile, MetroPCS are dead; long live T-Mobile

T-Mobile, MetroPCS are dead; long live T-Mobile

Summary: U.S. wireless carriers T-Mobile USA and MetroPCS Communications have completed their merger. Meet the new T-Mobile US.

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TOPICS: Telcos, Mobility
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tmobile-metropcs-good-thing-med

The U.S. wireless arm of German telecommunications giant Deutsche Telekom, T-Mobile USA, completed its merger with fellow wireless carrier MetroPCS Communications this morning.

The combined company will be called "T-Mobile US" and will begin trading on the New York Stock Exchange today as "TMUS." (Executives will be on hand to ring the bell.)

The new company bills itself as "America's un-carrier," a nod to its strategic move to pursue the pre-paid, no-contract market rather than the lucrative post-paid, contracted market dominated by larger U.S. carriers Verizon, AT&T and Sprint.

Six points about the new company:

  • It has about 43 million subscribers as of March 31, 2013.
  • Its total PoP coverage -- which stands for the number of people in its service area -- is 301 million. About 283 million of them are covered by owned network; 228 million are served with 4G with another 200 million scheduled to switch by the end of 2013.
  • Its target five-year (2012 to 2017) compounded annual growth rates are in the range of three to five percent for revenues, seven to 10 percent for EBITDA and 15 to 20 percent for free cash flow.
  • Its board of directors will have 11 members. Two of them will come from MetroPCS; Deutsche Telekom CFO Tim Höttges will serve as chairman.
  • It will be headquartered in Bellevue, Washington but maintain "a significant presence" in Richardson, Texas.
  • T-Mobile's John Legere is CEO and MetroPCS's J. Braxton Carter is CFO.
  • T-Mobile and MetroPCS will be maintained as separate brands. (Per my headline, only MetroPCS the company is obsolete.)

Market analysts expect the new company to be sluggish through 2013 as it reconfigures itself, with growth likely in 2014 and 2015. Some have suggested that the company will make a bid for No. 3 U.S. wireless carrier Sprint, which is finding itself squeezed between Verizon and AT&T at the top and now the combined T-Mobile at the bottom.

tmobile-metropcs-financials-may2013

The companies agreed to merge a week ago. Under the terms of the agreement, MetroPCS effected a 1 for 2 reverse stock split, made a cash payment of $1.5 billion to its stockholders (or approximately $4.05 per share prior to the reverse stock split), and acquired all of T-Mobile's capital stock from Deutsche Telekom in exchange for about 74 percent of MetroPCS' common stock.

Topics: Telcos, Mobility

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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3 comments
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  • I Like this.

    Of course this can go good as well as bad, but I like this. Now T-Mobile is publicly traded, and Metro is a major carrier. There are many benefits to be had from this merger.
    jetsethi
  • Metropcs T-mobile merger

    I was a MetroPCS customer and you wouldn't believe the mountain of
    grief they caused me. Story at http//SwensonStudio.com/metropcs.htm
    While I believe that this merger is good for the consumer in general,
    it's bad for the metroPCS subscribers. I'm glad that I bailed. If it
    was bad to be a Metro customer before, it's horrible now. Customers
    will be jumping ship by the boat load. Exactly, what T-mobile wants!
    After all they are buying the company for it band spectrum, not the
    customer base. The best case would be to take their Metro phones, get
    them unlocked and subscribe to goSmart Phone. I think that's the basic
    game plan. A plan that's $5 cheaper, without the narrow channels that
    Metro uses means a much faster 4g, and way better coverage and much
    better customer support. Not too bad unless you have a phone that
    can't be unlocked or you can't unlock the one you have.

    Then you'll have to queue up for your GSM/HSPA handsets and throw
    your old CDMA phones away. Remember the 'service and plan subject to
    change' fine print. Well, it's about to kick-in. If any of you think
    that T-mobile is going to slow it's race to compete with Verizon and
    AT&T, I have a bridge for sale. With their 40mhz pipe, double that of
    Verizon and AT&T, they have much, much more data capacity, which is
    where the action is. So, They have Verizon and AT&T in their sights.
    Do they have the capital and expertise to pull it off? I don't know,
    but it'll be fun to watch. That means the quickest possible phase out
    of Metro's CDMA net and the assimilation of it's towers, and more
    importantly band spectrum, into the T-mobile net is probably their
    highest priority. It would be mine.

    The only question that remains is how many 100's of millions of dollars
    will the top executives at Metro get as a parting gift for selling their
    company. If you think Metro's customer service was bad before. You
    haven't seen anything yet.
    mr_maserati
    • MetroPCS T-mobile merger

      Subscribers leav in droves. Exactly as I predicated.

      http://news.yahoo.com/t-mobile-ahead-schedule-metropcs-merger-020016886.html
      mr_maserati