Is Sprint Ready to Buy MetroPCS?

Sprint Nextel Corp. (NYSE:S) may be ready to take another crack at purchasing MetroPCS Communications (NYSE:PCS). For the second time this year, Sprint President and Chief Executive Dan Hesse and the members of his board are reportedly meeting to discuss a potential buyout plan.

Talks of acquiring MetroPCS, which fizzled and died back in February after the plan was deemed too costly, have apparently been revived thanks to recent upswings in the price of Sprint stocks.

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Piper Jaffray analyst Chris Larsen believes Sprint may be more prepared to make a deal after seeing its shares more than double since the original plans were abandoned in February.  Sprint, the nation’s third-largest wireless provider, might also be feeling pressure to get involved with the industry’s widespread consolidation.

However, they aren’t alone in the game. After witnessing Deutsche Telekom AG rush in with a proposal to merge its T-Mobile USA business with MetroPCS, Hesse and his executive team must act quickly if they want to make a bid. Sprint leadership is holding talks and meeting with advisors, and could announce whether they intend to pursue a deal as early as next week.

There are a number of reasons why Sprint and MetroPCS would be a good fit, including the fact they share the same kind of network standard, known as CDMA. T-Mobile, on the other hand, uses a network called GSM and resolving those differences could be a headache. Additionally, Deutsche Telekom’s offer involves a reverse merger that would make T-Mobile its own publicly held entity. The complexity of such a deal has MetroPCS shareholders wary.

If it were successful in landing a deal to takeover MetroPCS, Sprint would narrow the gap between itself and wireless giants AT&T (NYSE:T) and Verizon (NYSE:VZ).

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