T-Mobile and MetroPCS Announce Merger

German cellular giant Deutsche Telekom has announced plans to merge T-Mobile USA, the 4th largest carrier in the United States, with MetroPCS the 5th largest in a $1.5 billion deal.  The merged company will be owned 75% by Deutsche Telekom and 25% by MetroPCS and is expected carry the T-Mobile name and a userbase of 42.5 million subscribers.  The two companies expect completion of the merger in H1 2013 following regulatory approvals.

While the merger may seem strange on the outside considering that T-Mobile uses GSM and Metro PCS uses CDMA technology, it makes sense at a technical level.  MetroPCS has LTE network holdings in the AWS and PCS bands.  T-Mobile does not currently have a LTE network, but plans to build one on its AWS band once its HSPA+ network is transferred to its PCS band.  This will lead to stronger and better coverage for both carriers as MetroPCS’s CDMA network is phased out and customers are moved onto a single network based on T-Mobile’s infrastructure.

Current T-Mobile CEO John Legere will lead the merged company.  Don’t expect merged service though.  Even after the merger, T-Mobile and MetroPCS will operate as separate units of the new company led by the current COOs of the companies.

T-Mobile Press Release