T-Mobile USA and MetroPCS: A Perfect Fit

Senior Vice President, Government Affairs, T-Mobile USA

The calculation is easy – T-Mobile USA and MetroPCS together are stronger and more efficient companies, with the spectrum resources and economies of scale required to compete more effectively in today’s wireless marketplace and as a leading value carrier in the United States.

At present, T-Mobile USA trails AT&T, Verizon Wireless and Sprint in market share and service revenue.  T-Mobile USA would benefit substantially from having access to additional spectrum to deploy a robust 4G Long Term Evolution (LTE) offering.  And, although MetroPCS has enjoyed success in a number of major metropolitan areas, its ability to grow beyond those areas in the future will be limited by a lack of access to additional spectrum and the costs of building new stand-alone, greenfield networks if and when spectrum is available.  MetroPCS also is disadvantaged at present by its inability to offer seamless in-network, nationwide service to its customers. And both T-Mobile USA and MetroPCS face scale disadvantages that limit their access to some popular or cutting-edge devices.
  
The proposed transaction will allow T-Mobile USA and MetroPCS to combine their highly complementary spectrum portfolios, enabling a broader and deeper roll-out of 4G LTE services than either company could readily achieve on its own.  In particular, the transaction will provide a path to at least 20x20 MHz of 4G LTE in many areas in the near term, including 90 percent of the nation’s top 25 metro areas.   Moreover, the merged entity will have the ability to amortize investments in innovation more effectively and efficiently.  Similarly, as a publicly-traded entity, T-Mobile USA will now have direct access to the public debt and equity capital markets, giving it increased financial flexibility and enhanced stability.
 
Together, T-Mobile USA and MetroPCS can upgrade their networks and rapidly provide service and network benefits without customer disruption.  The T-Mobile USA and MetroPCS legacy networks will continue to operate for a transition period pursuant to a straightforward technology migration plan.  MetroPCS customers will be able to migrate over time to the combined company’s enhanced and expanded network and T-Mobile USA customers will enjoy improved and expanded LTE coverage. 

The familiar MetroPCS brand will be retained.  MetroPCS will continue to be operated as a separate business unit and will be able to take advantage of T-Mobile USA’s existing nationwide infrastructure to establish expanded MetroPCS-branded distribution in metropolitan areas unserved at present by MetroPCS.  And even within MetroPCS’ existing service areas, MetroPCS customers will enjoy significant benefits including access to a broader array of handsets, improved services, and the combined company’s 4G LTE network.  As a result, the transaction will improve the speed, quality, and robustness of the company’s current service offerings.
  
Current T-Mobile USA customers also will enjoy significant benefits from the proposed transaction. These include improved coverage and quality through the incorporation of MetroPCS’ cell sites and spectrum into the combined company’s network, access to a much richer LTE experience enabled through the integrated deployment of a single LTE network with wider channels, and access to a greater variety of devices and service plan options.
  
In sum, the combination of T-Mobile USA and MetroPCS will be pro-competitive and pro-consumer, giving the combined company the scale, spectrum, network, and resources to challenge and compete more effectively with its larger rivals in the provision of diverse products and services.  It will deliver an enhanced customer experience through a wider selection of attractive, competitively-priced plans, while at the same time using both T-Mobile USA’s and MetroPCS’ complementary spectrum to provide greater network coverage and a more robust deployment of LTE.  Put simply, through this transaction, T-Mobile USA and MetroPCS will establish a new and aggressive value leader in the wireless market, benefiting competition and consumer choice throughout the country.

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