T-Mobile USA has successfully completed the acquisition of
MetroPCS Communications, Inc.
). 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.
Sprint Nextel Corp.
). The closure came close on the heels of the deal approval by
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
SPRINT NEXTEL (S): Free Stock Analysis Report
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