The US Federal Communications Commission (FCC) has approved the potential merger between operators T-Mobile USA and MetroPCS.
T-Mobile parent company Deutsche Telekom announced details of the merger in October 2012. It will own 74 per cent of the combined company and MetroPCS the remaining 26 per cent. The deal now hinges on MetroPCS’ shareholders approving it, who will be holding a vote on the matter on April 2012, 2013.
FCC Commissioner Mignon L. Clyburn said that she believes that the merger would not likely result in competitive harm to wireless consumers.
“It also appears that this transaction could lead to benefits such as greater deployment of advanced Long Term Evolution (LTE) services, the expansion of the MetroPCS brand into new geographical markets, and the development of a more robust, nationwide network,” she said.
Clyburn noted that some, such as Communications Workers of America, raised concerns regarding whether the new company would pursue non-network synergies and efficiencies that could lead to significant job losses, a reduction in employment standards, and an adverse impact on customer service.
“In this regard, T-Mobile and MetroPCS made a statement that they have no plans to move call centers offshore or to reduce employment levels at T-Mobile call centers,” commented Clyburn. “They also stated that, over the last six months, the company has hired more than 3,600 employees in its 17 domestic call centers, and plans to continue hiring in those call centers, increasing the number of overall US positions, to support its customers. I hope that the new company, in fact, pursues a course that increases employment opportunities.”
Mike Roberts, principal analyst at Informa Telecoms and Media said that the deal could spark a final wave of consolidation in the US mobile market, which has been in limbo on the M&A front since regulators blocked AT&T’s bid for T-Mobile USA last year.
“Sprint also reportedly moved to acquire MetroPCS earlier this year but was blocked by its board, and it now appears too late for Sprint to make a counter-offer for MetroPCS. So it may turn its attention to Leap Wireless and/or US Cellular, the next-largest operators in the US after MetroPCS – both have near 6 million subscribers compared to MetroPCS with 9 million, and like MetroPCS they use the same CDMA technology as Sprint,” he said.
“However these smaller deals could complicate any potential merger between T-Mobile USA and Sprint, which has long been rumoured as it would put the combined group on relatively level footing with AT&T and Verizon Wireless.”
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