T-Mobile, MetroPCS are dead; long live T-Mobile
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 (Per my headline, only MetroPCS the company is obsolete.)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.
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.