Shares of MetroPCS (PCS) jumped over 14% after a reports they were in talks with Deutsche Telekom to merge with their U.S. unit, T-Mobile. It’s said MetroPCS is considering a stock-swap transaction that would give Deutsche control over the combined company, which would be publicly listed. (STAY AHEAD OF THE CURVE: Follow Kapitall on Twitter)
Other options to complete the deal include an IPO or an outright sale of T-Mobile. Deutsche Telekom is also in talks with other network companies, reports Bloomberg’s Businessweek. Deutsche Telekom will not comment on the rumors.
T-Mobile’s 33 million clients make it the fourth-largest wireless carrier in the country, behind AT&T (T), Sprint (S), and Verizon Wireless (VZ). Last year’s attempt to sell T-Mobile to AT&T (T) failed due to regulatory limitations. Now, they want to leverage T-Mobile’s ability to gain size and customers by investing in faster networks and cutting costs.
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If the merge should take place, who do you think will benefit most? Consider, the merge would put the two companies in a position to gain substantial market share.
But as Sanford C Bernstein’s London-based analyst Robin Bienenstock points out, the combination of their different wireless standards would be a “logistical nightmare,” because T-Mobile “uses the GSM standard, while MetroPCS’s is based on the code-division multiple access technology.” (via Bloomberg Businessweek)
This constraint could certainly dampen the positive impacts.
Use Kapitall tools to analyze the wireless carrier industry.
Interactive Chart: Press Play to compare changes in market cap for PCS, LEAP, S, T, and VZ:
Interactive Chart: Use the Turbo Chart to compare the stock performance of PCS and LEAP against the performance of the S&P 500 Index (SPX):
(Written by Danny Guttridge)