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T-Mobile, MetroPCS merger approved by FCC

March 12, 2013|By Andrea Chang
  • The FCC has approved the merger of wireless carriers T-Mobile USA and MetroPCS. The deal still has to be approved by MetroPCS shareholders at an April 12 meeting.
The FCC has approved the merger of wireless carriers T-Mobile USA and MetroPCS.… (Ted S. Warren / Associated…)

The Federal Communications Commission has approved the merger of T-Mobile USA and MetroPCS.

The deal still has to be approved by MetroPCS shareholders during an April 12 meeting.

“With today’s approval, America’s mobile market continues to strengthen, moving toward robust
competition and revitalized competitors," FCC Chairman Julius Genachowski said in a statement.

The carriers announced the proposed deal in October, saying a merger would create a stronger carrier focused on value.

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"Our combined company will have the products, spectrum, scale and resources to shake up this industry and deliver an entirely new wireless experience," T-Mobile Chief Executive John Legere said Tuesday.

T-Mobile, with 33.4 million mobile customers, is the nation's fourth-largest cellphone company; MetroPCS is the fifth with 8.9 million customers. 

The combined company will still be in the No. 4 position behind Verizon, AT&T and Sprint.

Under the terms of the agreement, MetroPCS shareholders will receive $1.5 billion in cash and 26% ownership in the company, which will have the T-Mobile name. Deutsche Telekom AG, the Germany company that owns Bellevue, Wash.-based T-Mobile, will receive a 74% stake. MetroPCS is based in Dallas.

Shares of MetroPCS fell 24 cents, or 2.3%, to $10.26 on Tuesday.

Analysts have said that the merger would probably result in a more bifurcated U.S. wireless industry, with Verizon and AT&T competing for the post-paid customer segment, and T-Mobile focusing on the lower-end pre-paid segment.

FCC Commissioner Jessica Rosenworcel said she had "expressed my concern" to the two carriers about potential job losses as a result of the merger.

"The companies have pledged to me that they have no plans to close any domestic call centers, to move them offshore, to close any retail stores, or to reduce retail positions as a result of this deal," Rosenworcel said in a statement. "They have also assured me that they plan to increase the overall number of workers they employ in the United States."

The deal was applauded by several consumer groups. John Bergmayer, senior staff attorney at Public Knowledge, said the deal would help "counter the power of AT&T and Verizon."

"It would be better if the wireless market was not so distorted that the loss of a competitor is a win for competition," he said. "Nevertheless, that is the case, and given these facts, this particular merger is in the public interest."

In 2011, AT&T announced it had agreed to buy T-Mobile USA for $39 billion. But the deal was called off after running into opposition from government agencies that said it would create a less competitive wireless industry and potentially lead to higher prices for consumers.


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