T-Mobile and MetroPCS Officially Merge

by Matt Klassen on May 2, 2013

Six months ago I could barely comprehend T-Mobile’s announcement that it was intending to acquire prepaid competitor MetroPCS. The news had come following the catastrophic collapse of the AT&T merger deal; a deal that was attempted primarily because T-Mobile parent company Deutsche Telekom wanted to extricate itself from the American wireless market, leading me to question if the German company’s head was really in the game.

Further I questioned what each company would bring to the table, at the time writing, “Though both companies were profitable, their smartphone catalogues were found wanting (no iPhone), their network technologies were substandard (no LTE), and both were haemorrhaging customers at an alarming rate.”

But it’s funny what six months can do to what initially looked like an ill-fated merger between two mobile losers. Since that time T-Mobile has rebranded itself as the “UnCarrier,” abolishing traditional wireless contracts; it now offers the iPhone, a delight to MetroPCS customers to be sure; and it has rolled out its nationwide 4G LTE network. Having remedied most of its major deficiencies, T-Mobile stands ready to welcome MetroPCS into the fold… now if only we could figure out what the latter brought to this relationship.

As of yesterday, the company now trading on the New York Stock Exchange as T-Mobile US (TMUS) will bring together the network, subscriber base, and other network assets of the fourth and sixth largest wireless providers (by revenue). The combined company now holds approximately 43 million subscribers, still placing it firmly in fourth place, well behind Sprint and the Verizon/AT&T duopoly.

Further, the combined revenues of both companies would have topped 24.8 billion last year, a figure that the company’s new management now promises will only rise. Speaking of management, the musical chairs of leadership in the company went as expected, with T-Mobile CEO John Legere tapped to captain this new ship, while MetroPCS CFO Braxton Carter has retained his same role for the company following the transition.

As mentioned, the combined company will continue to operate T-Mobile and MetroPCS as two separate brands, at least for a time, with the ultimate goal of moving towards a common network infrastructure and common support services. Such integration may take some time though, given that the network technology MetroPCS employs doesn’t comport with what T-Mobile currently uses.

That said, despite my initial skepticism, this merger certainly has potential to create a worthy fourth competitor in the American wireless market. As Legere said in a statement, “The combination of T-Mobile and MetroPCS creates an even stronger disruptive force in theU.S.wireless market…Together, asAmerica’s UnCarrier, we’ll continue our legacy of marketplace innovation by tearing up the old playbook and rewriting the rules of wireless to benefit consumers.”

In the end, the only thing that remains strange about this merger is that Legere might actually be right, his company might have found the only recipe to compete with the larger players, by rewriting the rulebook and having T-Mobile play its own wireless game. As I said though, other than bringing subscribers and general network resources, it’s hard to see what MetroPCS specifically brings to the table in this deal, a struggling player now simply content to be part of the UnCarrier family.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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