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MetroPCS Says T-Mobile Deal Now in Shareholders
MetroPCS Says T-Mobile Deal Now in Shareholders' Hands

By Adam Dickter
March 6, 2013 1:46PM

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"The AT&T-T-Mobile [deal] was not allowed by regulators because it would merge two of the top four players," said wireless consultant Jeff Kagan. "T-Mobile and MetroPCS, however, may be approved since they are smaller players." If approved, the merger would strengthen both players, but it's unclear if it would boost them enough to change the market.
 



Will it be called T-PCS, or Metro-Mobile? Or something else completely?

The fourth- and fifth-largest U.S. wireless carriers, T-Mobile and no-contract-specializing MetroPCS, are one step closer to closing a merger deal this week after a deadline for objections by government regulators passed without incident.

Now It's Up to Shareholders

The deal is now subject to approval by shareholders of MetroPCS, who will cast their votes on the matter at a special meeting on April 12, open to those who have a stake as of the close of business on March 11.

"The MetroPCS board unanimously recommends that stockholders vote their shares FOR all of the proposals relating to the proposed combination with T-Mobile," the company said in a statement Wednesday, noting that a failure to vote or an abstention constitutes a no vote. "If stockholders vote against the proposed combination, there is no assurance that MetroPCS will be able to deliver the same or better stockholder value."

T-Mobile is a wholly owned subsidiary of Deutsche Telekom AG, which has been trying to dump T-Mobile for years.

The Hart-Scott-Rodino Antitrust Improvements Act, signed by President Gerald Ford in 1976, requires detailed filings with both the Federal Trade Commission and the Department of Justice and a 30-day waiting period (15 days if it's an all-cash deal) by parties in merger agreements and to allow the impact on consumers to be assessed.

It was during that period that the Justice Department objected to AT&T's planned $39 billion acquisition of T-Mobile in 2011, on grounds that it would hurt competition, which eventually killed the deal, resulting in a $4 billion breakup fee for AT&T, not to mention an embarrassing stumble.

Because Dallas-based MetroPCS is 10 times smaller than AT&T with 9.5 million subscribers, the deal appears to the feds to be less threatening to consumer choice.

"The AT&T-T-Mobile [deal] was not allowed by regulators because it would merge two of the top four players," said wireless industry commentator and consultant Jeff Kagan.

"T-Mobile and MetroPCS, however, may be approved since they are smaller players."

If approved, Kagan said, the merger would strengthen both players, but it's unclear if it would boost them enough to help them substantially gain ground in the market.

No Powerhouses

"T Mobile is not modernized to 4G speeds like Verizon and AT&T or even Sprint," Kagan said. "MetroPCS operates their own network and do a good job, but they are no 4G powerhouse either."

In short, Kagan told us, the likely approved merger will not significantly change the marketplace.

"Customers will likely be able to stay on their existing plans for now, and have to make changes when they upgrade their phones and renew their plans," he said. "So the period of instability hopefully won't be that tough."

The MetroPCS statement notes that in addition to shareholder approval, the deal is subject to "certain other regulatory approvals and customary closing conditions."
 

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