Can the New T-Mobile USA Make a Big Splash?
It’s finally happened. MetroPCS (NYSE:PCS) and Deutsche Telekom’s T-Mobile USA (NYSE:TMUS) have merged, giving birth to the “TMUS” ticker on the New York Stock Exchange.
The deal took a long time to finally go through. T-Mobile had been working for a while to find a merger of some sort, having tried to form a partnership with AT&T (NYSE:T) in the past but getting stopped by regulators. It also took some effort on the part of Deutsche Telekom to get MetroPCS to agree to the deal.
To get the deal through, Deutsche Telekom had to reduce a shareholder loan to MetroPCS from $15 billion to $11.2 billion, while also dropping the interest rate by half of a percentage point. The large German carrier also had to make a $1.5 billion cash payment to MetroPCS investors, coming out to $4.06 a share. In return, Deutsche Telekom received a 74 percent stake in the combined company, while MetroPCS shareholders took the remaining stake.
The merger is big news for T-Mobile USA, as it will gave the company a large boost to its customer base as well as a increase in available spectrum. As it’s important for a network to have wide coverage and also the fastest networks speeds, the extra airwave licenses could help T-Mobile build a network that can better compete with the top 3 carriers in the U.S. — Verizon (NYSE:VZ), AT&T, and Sprint-Nextel (NYSE:S).
A number of factors could be adding up in T-Mobile’s favor to give it some nice activity. The company recently started offering Apple’s (NASDAQ:AAPL) iPhone 5 on its network, it switched to offer monthly plans rather than 2-year contracts, and now it has merged with MetroPCS for more customers and spectrum licenses.
The new merged company will run under the T-Mobile USA name, and be listed under the “TMUS” ticker. The new ticker appeared on the New York Stock Exchange Wednesday morning, opening at $16.25 per share, with a trading range of $16.24-$16.99 before noon that day.
With T-Mobile now finally standing on its own two feet in the U.S., it is time to see how its stock will fare and whether the merger with MetroPCS will lend a strong helping hand to the company.
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