An announcement concerning a tie-up between Deutsche Telekom’s T-Mobile USA and MetroPCS, the US prepaid operator, could be imminent – with merger discussions thought to be advancing quickly.
MetroPCS confirmed yesterday that the pair are in talks “regarding an agreement to combine T-Mobile USA and MetroPCS” but warned that there were “no assurances” that a deal would be made.
However, the Financial Times reports that Deutsche Telekom’s supervisory board is meeting today in Bonn to discuss the matter – despite it being a national bank holiday in Germany – while in the US shares in MetroPCS have surged to a 14-month high in anticipation of a deal.
The tie-up is expected to create a new standalone US operator in which Deutsche Telekom would have a majority stake.
T-Mobile USA and MetroPCS are the country’s fourth and fifth largest operators on 33.2 million and 9.3 million connections, respectively. According to analysis by Bernstein Research, the combined entity would have a 12 percent overall US market share – and control 29.5 percent of the prepaid market.
Its 41.5 million connections base would also bring it closer to third-placed operator Sprint (54.4 million), whose share price closed down 5 percent yesterday following confirmation of the talks.
Bernstein Research added that the deal “could be a good one” for the German group as MetroPCS’ spectrum would complement that of T-Mobile USA, especially in the northwest of the country.
Deutsche Telekom has been looking to strengthen its US unit for some time in an attempt to keep pace with larger rivals. A US$39 billion merger with AT&T was called off last year following regulatory objections.