Bloomberg News recently broke the story that Germany’s Deutsche Telekom is in talks to merge its struggling T-Mobile USA subsidiary with MetroPCS. Ever since the failed acquisition by AT&T, many options have been put on the table as to how the company can be saved. This latest leak suggests that T-Mobile would perform a stock-swap which would result in the company having full control over the new entity which would then be publicly traded. A move like this suggests that Deutsche Telekom is not fully set on an outright sale of the US operation as it’s only option.
It seems odd to have two declining companies merge together with the hopes of somehow turning their bad fortune around though. MetroPCS just reported last week that it has seen a 82% drop in new customers year-over-year, and while T-Mobile USA reported a gain in customers this last quarter, the number of contract subscribers has continued to drop. As each quarter comes and goes, both companies appear to be more desperate for a lifeline, and while the merger might not be the most preferred option, their choices are dwindling.
Both companies have been in separate talks with other companies as well, so things are still up in the air for now. We’ll continue to follow the situation as will provide updates as they come out.