T-Mobile USA and Metro PCS will merge, the companies announced Wednesday, after getting approval from both company boards.
In a statement, the companies said they will combine their efforts to roll out a high-speed 4G LTE network.
The deal, T-Mobile hopes, will give the new venture the “expanded scale, spectrum and financial resources to aggressively compete with the other national U.S. wireless carriers.”
MetroPCS shareholders will receive $1.5 billion cash and 26 percent ownership in the new venture. T-Mobile USA parent company Deutsche Telekom will have majority control with 74 percent of the stake.
“We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom’s position in the expanding U.S. wireless market,” said René Obermann, the German carrier’s chief executive officer. “The T-Mobile and MetroPCS brands are a great strategic fit – both operationally and culturally.”
Both companies are known for offering cheaper plans — MetroPCS is a no-contract wireless carrier — and have a strong base in the lower end of the market. More importantly, T-Mobile and MetroPCS have rights to LTE spectrum in the same band — meaning that it will be easier for them to work together as they move their networks forward.
With MetroPCS customers, T-Mobile will have approximately 42.5 million subscribers — not enough to overtake Sprint as the third-largest carrier in the United States. But the merger, as The Washington Post reported, will put Sprint in a much tougher spot in the market.
The deal is subject to MetroPCS shareholder and regulatory approval, but is unlikely to face strong objections from regulators, The Post reported. The transaction is expected to close in the first half of 2013.
John Legere, T-Mobile’s president and chief executive, will retain his title with the new company. MetroPCS chief financial officer and vice chairman J. Braxton Carter will be the new company’s chief financial officer.
Though the larger company will retain the T-Mobile name, MetroPCS and T-Mobile will operate as separate consumer units, the release said.