Ozier Muhammad/The New York TimesA branch of T-Mobile USA in Manhattan. The network operator is a unit of the German telecom giant Deutsche Telekom.
12:54 p.m. | Updated
Deutsche Telekom said on Tuesday that it was in talks to buy MetroPCS and merge it with its T-Mobile USA unit, as the German telecom giant seeks to bolster its flagging business in the United States.
Under the terms of the proposed transaction, Deutsche Telekom would own the majority of shares in the newly combined American network operator.
Deutsche Telekom warned that “significant issues” had yet to be resolved. But people briefed on the negotiations said that a deal could be announced as soon as Wednesday.
If completed, a deal would come nearly a year after T-Mobile’s proposed $39 billion sale to ATT collapsed amid fierce opposition from antitrust regulators. And it would help shore up the Deutsche Telekom subsidiary’s position as a lower-cost alternative to Verizon Wireless and ATT.
Shares in MetroPCS shot up nearly 18 percent on Tuesday, to $13.60, after Bloomberg News reported talks between the two sides. That valued MetroPCS at about $4.9 billion.
Representatives for Deutsche Telekom and MetroPCS declined to comment or were not immediately available for comment.
Deutsche Telekom has been keen for years to find a way to strengthen its American subsidiary, which has lost customers to bigger rivals that offer faster data services and, perhaps more importantly, the iPhone. With 33,168 customers T-Mobile trails its bigger competitors, which also include Sprint Nextel, by considerable margins. And it lost 205,000 subscribers in its second quarter this year, quadruple what it reported a year ago.
Adding MetroPCS would give T-Mobile 9.3 million customers, though their phones operate on a different network technology.
Based in Richardson, Tex., MetroPCS has long been seen as a target for consolidation in the cellphone service industry. The company’s deal to sell itself to Sprint for stock and cash collapsed this year after the bigger network operator’s board vetoed the proposed transaction.
MetroPCS and another low-cost service provider, Leap Wireless, have considered merging several times over recent years, though those talks broke down repeatedly over price.
Article source: http://dealbook.nytimes.com/2012/10/02/deutsche-telekom-said-to-be-near-a-deal-to-buy-metropcs/?partner=rss&emc=rss
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