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October 4, 2012

T-Mobile USA, MetroPCS to merge to take on bigger rivals

The combined company is expected to accelerates T-Mobile's challenger strategy with increased scale, spectrum and financial resources

By CBR Staff Writer

Deutsche Telekom and MetroPCS Communications have signed a definitive agreement to combine T-Mobile USA (T-Mobile) and MetroPCS to better compete with bigger rivals like Verizon Wireless, AT&T and Sprint Nextel.

The combined company is expected to retain the T-Mobile name and is expected to accelerates T-Mobile’s challenger strategy with increased scale, spectrum and financial resources.

Deutsche Telekom CEO René Obermann said: "The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network."

The new joint company will combine T-Mobile and MetroPCS’ complementary spectrum to provide enhanced network coverage, deeper LTE network deployment and a path to at least 20×20 MHz of 4G LTE in many areas.

It will also introduce MetroPCS’ plans and services to new areas to complement T-Mobile’s applications and use network to advance its B2B applications and MVNO platform.

The new company will operate T-Mobile and MetroPCS as separate customer units, led by Jim Alling, currently Chief Operating Officer of T-Mobile and Thomas Keys, currently President and Chief Operating Officer of MetroPCS, respectively.

The transaction will see MetroPCS shareholders to receive $1.5bn in cash and 26% ownership in the combined company, while Deutsche Telekom to receive 74% stake in combined company.

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MetroPCS chairman and CEO Roger D. Linquist said through the convergence of both companies to LTE technology, the combined company will provide cutting-edge 4G LTE services and accelerate its roll-out of 4G LTE.

"In addition, this combination will allow MetroPCS to expand its no-contract offerings into new major metro areas and enhance our combined spectrum portfolio, which provides the potential to offer 4G LTE over at least a full 20×20 MHz in many metro areas," Linquist said.

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