AT&T, Inc. (NYSE:T): Federal officials who blocked AT&T Inc.’s $39 billion acquisition of T-Mobile USA have a whiff of vindication. T-Mobile’s German parent Deutsche Telekom AG is close to a merger with smaller rival MetroPCS Communications Inc. The deal would strengthen T-Mobile’s position as the country’s fourth-largest wireless operator and send the market in a far different direction than it appeared to be headed a year ago. A strengthened competitor would please regulators who were worried that the United States would lose a low-priced rival to industry leaders Verizon Wireless and AT&T.
Sprint Nextel Corp. (NYSE:S): A joint venture between T-Mobile USA and MetroPCS could make for a potent player in the rough-and-tumble prepaid business. T-Mobile has, over the past few years, expanded their no-contract options to consumers, giving them a badly needed source of customer growth. MetroPCS, meanwhile, has long been an aggressive though small provider of prepaid services with experience in running a low-cost business. Together, the companies could present a challenge to Sprint Nextel Corp. who has been the largest champion of no-contract services with multiple prepaid brands.
Are these stocks a buy or sell? Let us help you decide. Check out our Wall St. Cheat Sheet Stock Picker Newsletter now >>
Verizon Communications Inc. (NYSE:VZ): Today, T-Mobile is back “in fighting shape” with the news that parent company Deutsche Telekom has agreed to merge their United States operations with flat-rate player MetroPCS (NYSE:PCS). In fact, some analysts are saying that this move makes T-Mobile a viable threat to the big two operators AT&T and Verizon Wireless (NYSE:VZ) because it means that T-Mobile will be able to deploy LTE in a 20×20 MHz of spectrum. With that much spectrum, T-Mobile’s LTE deployment will be on par with the bigger operators.
Leap Wireless International Inc. (NASDAQ:LEAP): After the MetroPCS deal, Leap Wireless International Inc. was given a 14% downgrade by JP Morgan.
MetroPCS Communications, Inc. (NYSE:PCS): Deutsche Telekom (DTEGY) and MetroPCS Communications (NYSE:PCS) have signed a definitive agreement to combine T-Mobile USA and MetroPCS. The combined company, which will retain the T-Mobile name, will have the expanded scale, spectrum, and financial resources to aggressively compete with the other United States national wireless carriers.
Don’t Miss: Will Sprint Get Left In The Dust By This Merger?