T-Mobile and MetroPCS announced today that they have come to an agreement to merge the two companies. The combined entity will use the T-Mobile brand and will have a total of 42.5 million subscribers. While it won't change the dynamic of its current position in the U.S. market (it's #4), it will gain access to more space on the airwaves. T-Mobile USA’s German parent, Deutsche Telekom AG, will hold a 74 percent stake in the new entity, while MetroPCS Communications shareholders will own the remaining 26 percent. MetroPCS shareholders will also receive a payment of right around $1.5 billion.
"We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment," Deutsche Telekom CEO Rene Obermann said in a statement.
While the telecoms might be delighted to make the announcement, advocacy group Free Press issued a statement saying that the FCC must do a better job of making sure this merger is good for consumers.
"Wireless consumers have long suffered in an uncompetitive market. We need stronger competitors to push back against the AT&T-Verizon juggernaut, ones that will force these carriers to compete on price and service quality," said Free Press Policy Director Matt Wood. "But consolidation at the bottom between a regional prepaid carrier and the last-place national carrier is not going to fix all of the problems in our wireless market. The FCC is going to have to formulate bold public policies to bring consumers the relief they need."
The FCC will have to approve the deal and it may require further investigation by the FTC as well. In addition the FCC may put conditions on the deal prior to its approval, like rules related to net neutrality.