Back in May of this year, it was reported that Deutsche Telekom’s US subsidiary, T-Mobile USA, was in merger talks with MetroPCS. It came as no surprise that T-Mobile was looking for a lifeline after the failed buyout attempt by AT&T last year, and after many buyout and merger rumors, Deutsche Telekom announced today that the company has agreed on a MetroPCS merger deal. Although the deal still needs FCC approval, it is expected to go through without any large issues and should be completed in the first half of next year. When complete, the merger will result in MetroPCS officially taking over T-Mobile USA but operating under the T-Mobile name with T-Mobile USA’s CEO remaining in place.
As the news broke this morning, analysts were torn on what this means for the struggling mobile carrier in the long term. T-Mobile is currently the fourth largest carrier in the United States with roughly 27 million contract subscribers, and will remain fourth after adding the 9.3 MetroPCS subscribers. What the company has to gain is the larger infrastructure and wireless spectrum that will make it easier to build out their LTE network to better compete with AT&T, Verizon, and Sprint.
What remains to be seen is how the new company will compete with the big three in the coming years. Even by pushing themselves as a lower cost alternative, many still believe that it will be a matter of time before T-Mobile looks to Sprint or AT&T for another lifeline. Until then, current MetroPCS customers will have until 2015 to upgrade their current phones to ones that will be compatible with the new network based on T-Mobile’s technology.