MetroPCS Communications Inc.
) has finally received a favorable ruling by the Committee on
Foreign Investment in the United States (CFIUS) regarding the
combination of T-Mobile USA (a subsidiary of
Deutsche Telekom AG
]) with the former. This clears MetroPCS of all regulatory
CFIUS believes that the merger will not be a threat to the
U.S. national security, giving clearance to the proposed
Besides the FCC, the proposed merger has been approved by
board of directors of both, MetroPCS and Deutsche Telekom. The
deal will be sealed after MetroPCS shareholders' approval through
a meeting on Apr 12. It is expected to close in the first half of
Per the deal, MetroPCS will get a 24% stake in the combined
company and Deutsche Telekom will get the rest. The transaction
process of the deal could be viewed as recapitalization of
The deal is expected to generate positive synergies for both
the companies in terms of financial growth with estimated
five-year CAGR for revenues, EBITDA and free cash flow in the
range of 3%-5%, 7%-10% and 15%-20%, respectively.
Apart from financial benefits, Merger between MetroPCS and
T-Mobile will boost their operation capabilities in the U.S. and
will also offer strong resistance against the big industry
Verizon Communications Inc.
Sprint Nextel Corp.
Currently, MetroPCS and T-Mobile have over 9 million and 33
million subscribers, respectively. This will form a subscriber
base of more than 40 million for the combined company.
Further, the deal will also add to spectrum capacity and
result in higher penetration of LTE networks that support speeds
up to 20x20 MHz of 4G LTE in several regions. T-Mobile will be
able to benefit from MetroPCS' superior market position in no
contract wireless services, while MetroPCS will gain from
T-Mobile's advance B2B services and Mobile virtual network
operator (MVNO) platform.
MetroPCS has a Zacks Rank #3 (Hold).
DEUTSCHE TELEKM (DTEGY): Free Stock Analysis
METROPCS COMMUN (PCS): Free Stock Analysis
SPRINT NEXTEL (S): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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