Tuesday, March 12, 2013

FCC Approves MetroPCS + T-Mobile USA Merger

The FCC approved the proposed merger of T-Mobile USA and MetroPCS, including the transfer of control of a number of Personal Communications Service (PCS) and Advanced Wireless Services (AWS-1) licenses and leases, and one lower 700 MHz license.

 “With today’s approval, America’s mobile market continues to strengthen, moving toward robust competition and revitalized competitors. We are seeing billions more in network investment, while the courts have upheld key FCC decisions to accelerate broadband build-out, promote competition, and benefit consumers, including our broadband data roaming and pole attachment rules. Today’s action will benefit millions of American consumers and help the U.S maintain the global leadership in mobile it has regained in recent years," stated FCC Chairman Julius Genachowski.

http://www.fcc.gov



On October 3, 2012, MetroPCS agreed to merge with T-Mobile USA (a subsidiary of Deutsche Telekom) in a deal that creates a much strengthened No.4 mobile operator in the U.S. market with deeper network coverage and the need for an accelerated path to one common LTE network. 


 Despite operating incompatible legacy networks (CDMA and GSM), the companies said rapid handset turnover (60% - 65% per year) will make for a relatively quick migration of MetroPCS customers to LTE.   MetroPCS customers will also benefit from T-Mobile's much more extensive network.


The basis for the merger will be to re-farm MetroPCS spectrum to create capacity services.  Specifically, the spectrum migration plan for the merged company will be:


  1. GSM will become the merged company's “universal” technology for roaming, M2M and legacy device
  2. MetroPCS PCS spectrum will be migrated to HSPA+
  3. T-Mobile AWS will be repurposed from HSPA+ to LTE over time
  4. Available MetroPCS AWS spectrum will be migrated to LTE
  5. AWS will become NewCo's primary LTE band across Americas

Some other key points of the deal:
  • The merged company will use the T-Mobile name and brand.  It will be traded on the NYSE.
  • The combined company is projected to have 2012 Pro Forma Revenue of $24.8 billion
  • The combined company will have 42.5 million subscribers

  • The annual CAPEX budget for the combined company would be approximately $4.2 billion at current level
  • Deutsche Telekom will receive a 74% stake
  • MetroPCS Shareholders will receive $1.5 billion in cash and 26% ownership in the combined company
  • The new company will continue to position itself as "the best value in wireless" in the U.S. market
  • The combined company will have ~70,000 total points of distribution, including 50,000 retailers
  • The cost synergies are projected $6 - $7 billion over 5 years, including both CAPEX and OPEX on network infrastructure
  • The company’s headquarters will be in Bellevue, Washington and it will retain a significant presence in Dallas, Texas.

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