T-Mobile Closes MetroPCS Buyout - Analyst Blog

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T-Mobile USA has successfully completed the acquisition of MetroPCS Communications, Inc. ( PCS ).  MetroPCS has reportedly added 9 million customers to the existing 43 million of T-Mobile USA - a subsidiary of Deutsche Telekom AG and the fourth largest carrier in the U.S. preceded by Verizon Communications Inc. ( VZ ), AT&T, Inc. ( T ) and Sprint Nextel Corp. ( S ). The closure came close on the heels of the deal approval by MetroPCS shareholders. 

After facing constant pressure by shareholders to modify the deal terms, MetroPCS received the bid from T-Mobile to woo shareholders who stood against the merger. T-Mobile, in its final offer to MetroPCS, reduced the combined company's debt burden by $3.8 billion to $11.2 billion and reduced the interest rate that added optimism to the deal's closure. On Apr 24, the acquisition deal received its final approval from shareholders. Notably, the deal had previously cleared all regulatory approvals including the FCC nod. 

The new combined company will be listed on NYSE with the name of T-Mobile USA and the new ticker symbol - TMUS.  The company will be headquartered in Bellevue, Washington. The deal provides MetroPCS shareholders with a 26% stake in the company and cash consideration of 1.5 billion that translates into $4.06 per share.  Further, Deutsche Telekom provided an unsecured revolving credit facility of $500 million to the combined company. Deutsche Telekom will also facilitate the merged company's operations with $5.5 billion backstop commitment for certain MetroPCS third-party financial dealings.


Further, the deal is expected to result in accelerated financial growth with estimated five-year CAGRs for revenues, EBITDA and free cash flow in the range of 3-5%, 7-10% and 15-20%, respectively. The deal would also add spectrum capacity and result in higher penetration of LTE networks that support speed up to 20x20 MHz of 4G LTE in several regions. Going forward, T-Mobile is reportedly planning to close down MetroPCS' network over a period of two years and utilize the airwaves to build and expand its own network capabilities.

 MetroPCS currently has a Zacks Rank #4 (Sell rating).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: PCS , S , T , VZ

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