The proposed merger of T-Mobile and MetroPCS will allow the combined company to push unlimited data plans, as a counterbalance to the other major carriers’ attempts to charge customers according to their use, company leaders said on Wednesday.
“The combination of our complementary spectrum will allow our combined company to drive unlimited as a key differentiator,” T-Mobile President and CEO John Legere told reporters in a conference call. “That’s a big part of who we are now and who we’ll be in the future.”
Continue ReadingThe decision to compete with major carriers Verizon and AT&T by continuing to offer unlimited data plans addresses what has been a major concern for policymakers.
While the deal would allow the combined company to increase its customer base to 42 million customers, so that it can become a more robust competitor to Verizon, AT&T and Sprint, it is fundamentally a play by T-Mobile’s parent, Deutsche Telekom, for more airwaves.
“We’re bringing together two complementary spectrums,” Legere said. “We will increase our contiguous spectrum for LTE by an average of 40 percent by the end of 2013.”
Combining the two companies’ spectrum holdings, along with the frequencies T-Mobile won from AT&T when that merger failed, the airwaves it gained in a swap with Verizon, and the companies’ current holdings, will make it a more formidable competitor.
The new company would rank as the fourth-largest carrier, behind Verizon, AT&T and Sprint — the same spot T-Mobile now occupies by itself.
The deal is subject to review by the Federal Communications Commission and the Justice Department. Regulators blocked an earlier proposed merger of AT&T and T-Mobile out of concern that it would lessen competition. This transaction might be more palatable. The combined company’s smaller size, along with commitments to remain a disruptive force in the marketplace, might assuage regulators’ concerns.
A representative of the FCC declined to comment Wednesday. A representative of the Justice Department declined to comment.
Critics of the AT&T/T-Mobile deal aren’t jumping to attack this one.
“At a time when two companies continue to dominate the wireless marketplace, the need for a strong national competitor has never been greater,” Rep. Anna Eshoo (D-Calif.) said in a statement. “The proposed merger of T-Mobile and MetroPCS has the right ingredients to provide consumers with a viable alternative for wireless voice and data service.”
Although it did not support the AT&T/T-Mobile merger, the public interest group Free Press said the marketplace needs stronger competitors to AT&T and Verizon.
“We need stronger competitors to push back against the AT&T-Verizon juggernaut, ones that will force these carriers to compete on price and service quality,” said Free Press Policy Director Matt Wood. “But consolidation at the bottom between a regional prepaid carrier and the last-place national carrier is not going to fix all of the problems in our wireless market.”
Under the terms of the agreement, MetroPCS shareholders will receive $1.5 billion in cash and 26 percent ownership in the company, which will have the T-Mobile name. Deutsche Telekom will receive a 74 percent stake.
The combined company is expected to have roughly 42.5 million subscribers and $24.8 billion in revenue.
Deutsche Telekom has agreed to pay a breakup fee ranging from $150 million to $250 million if the proposed merger is terminated, according to a Securities and Exchange Commission filing on Wednesday.
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