The merger marry-go-round speculation stopped on T-Mobile USA and MetroPCS (PCS) this week as the two operators were reported to be in talks to combine their network operations that would form a more formidable No. 4 operator.
This week’s rumor was reported by Bloomberg and instantly sent MetroPCS’ stock price skyward, following months of tepid investor response that had the carrier’s stock hitting a 52-week low just last week. MetroPCS, it should be noted, was reported to have been close to being acquired by Sprint Nextel earlier this year, a deal that was thwarted at the last minute by Sprint Nextel’s board of directors.
Bloomberg cited those “familiar with the situation” as claiming T-Mobile USA’s parent company Deutsche Telekom was considering a stock swap that would result in DT having a majority share in the combined operations. This rumor followed word from DT’s management that it was looking at potential strategic alternatives for its U.S. operations following the demise of a $39 billion acquisition attempt last year by AT&T.
The new news also comes just a day before T-Mobile USA was set to release first quarter financial results and following a recent announcement of to re-invigorate its operations in the market following nearly a year of stagnation while the AT&T deal wallowed through regulatory hurdles.
Analysts noted that it’s likely MetroPCS is being shopped around to potential suitors, with Macquarie Equities Research noting that the carrier’s lack of progress on announcing nationwide LTE plans seems to indicate that management is not looking out for long-term goals.
“Until [MetroPCS] commits to a 4G wholesale and/or spectrum deal with [Clearwire] or [Dish Networks], we assume they are still trying to sell the company,” the firm noted in a report. “If they were investing for the long term, we think they would have secured 4G spectrum and network capacity already.”
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