'Complex' T-Mobile-MetroPCS Deal 'Looks Good on Paper'

By Arselia Gales Comments

**Editor's Note: Please click here for the biggest BSS/OSS and service-provider M&A during Q4 2012.**

MetroPCS shareholders are poised to vote on T-Mobile's proposed acquisition of the carrier on March 28.

The deal is structured so that T-Mobile will merge with MetroPCS and Deutsche Telekom – T-Mobile's parent – will receive 74 percent of the company. MetroPCS shareholders will receive the remainder. In addition, the MetroPCS shareholders will receive $1.5 billion.

“Already once-burned by a failed merger with AT&T, the not-yet-twice-shy T-Mobile faces a big hurdle with the MetroPCS shareholder vote. Much as T-Mobile saw subscribers flee during its time in limbo on the aborted AT&T deal, MetroPCS is shedding subscribers as well, including another 93,000 announced it its fourth quarter earnings call today. That will put additional pressure on Metro’s still-skeptical shareholder base to approve the deal," noted Yankee Group senior analyst Rich Karpinski, commenting specifically on a Nasdaq article.

Karpinski also wonders if T-Mobile can deliver on its MetroPCS strategy. He says it won't be easy, but the pieces do in fact fit together.

"It all looks good on paper — and fits equally well with T-Mobile’s value and no-subsidy service strategy — but with takeover’s this complex, the devil (just ask Sprint, still struggling with its Nextel acquisition) will be in the execution details," he said.

T-Mobile is America's fourth-largest wireless provider, while T-Mobile USA is the fifth biggest.

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