According to a report from Wall Street Journal, DISH Network Corp. (NASDAQ:DISH) was in talks to purchase MetroPCS Communications Inc (NYSE:PCS) before T-Mobile came in and took the cellular carrier. The satellite TV giant offered around $4 billion in August to buy MetroPCS, which was $11 per share of MetroPCS.
If the deal had gone through, DISH Network Corp. (NASDAQ:DISH) would’ve paid 30 percent in cash and 70 percent in stock, according to an SEC filing. However, owing to differences the talks fell apart between Dish and Metro, and in October, MetroPCS announced that it was being purchased by Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY)’s T-Mobile USA.
The bid for MetroPCS Communications Inc (NYSE:PCS) highlights the fact that DISH Network Corp. (NASDAQ:DISH) desperately wants to become a wireless provider. It also awaits approval from FCC on whether or not whether it can use some of the spectrum it owns for a ground-based cellular network. The satellite TV provider has billions of dollars of airwave rights to spectrum to carry wireless phone signals, that it has purchased since 2008.
Not only has DISH Network Corp. (NASDAQ:DISH) expressed interest in buying MetroPCS, but as per a filing, MetroPCS held talks with at least eight other companies, before eventually agreeing to merge with Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY)’s T-Mobile USA. MetroPCS said yesterday in a proxy filing to investors that an unnamed company, referred to as “Company G,” decided not to go forward with the deal in February. The experts are guessing the unnamed company to be Sprint Nextel Corporation (NYSE:S).
After the failed talks in February, Sprint Nextel Corporation (NYSE:S) and MetroPCS were again talking in August before the deal with T-Mobile was set. In October of this year, a Japanese company, Softbank Corp (TYO:9984) agreed to buy a 70 percent stake in Sprint for $20.1 billion. Sprint shares have more than doubled since the February MetroPCS talks.
The partnership between T-Mobile and MetroPCS Communications Inc (NYSE:PCS), the fourth and fifth largest carriers in the US, will have sales of $24.8 billion and 42.5 million subscribers — still well behind Verizon Wireless, AT&T Inc. (NYSE:T) and Sprint Nextel Corporation (NYSE:S). As per the deal, Deutsche Telekom will hold 74 percent of the merged business and pay MetroPCS shareholders $1.5 billion in cash.
The newly formed entity will retain the T-Mobile name, and will be headed by John Legere, the former chief executive officer of Global Crossing Ltd., who took charge of T-Mobile USA in September. MetroPCS Communications Inc (NYSE:PCS) will have to pay Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) $150 million if it backs out of the arrangement, as per the terms of the deal. The reverse breakup fee for T-Mobile is $250 million.