The Federal Communications Commission (FCC) has approved the merger of T-Mobile with MetroPCS Communications Inc (NYSE:PCS). FCC Chairman Julius Genachowski said that the approval of the fourth and fifth largest wireless carriers’ merger is a sign of strengthening American mobile market.
“We are seeing billions more in network investment, while the courts have upheld key FCC decisions to accelerate broadband build-out, promote competition, and benefit consumers, including our broadband data roaming and pole attachment rules,” said Genachowski.
FCC said in a statement that the merged company will benefit millions of consumers across the nation and help the United States maintain its leadership in the mobile space. Communication technology and mobile broadband are key factors in economic growth. In the last four years, mobile broadband has contributed over 40% of the annual wireless capital investment in the country.
MetroPCS Communications Inc (NYSE:PCS) shareholders have opposed the merger. Today, MetroPCS issued a letter to shareholders asking them to vote in favour of the proposed deal. Shareholders are expected to vote on the proposed transaction on April 12. The merger also received a green signal from the Department of Justice.
According to the deal, MetroPCS will swallow up its bigger rival T-Mobile USA. MetroPCS Communications Inc (NYSE:PCS) shareholders will get 26 percent stake in the combined company while the remaining 74 percent stake will be owned by T-Mobile USA’s parent firm Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) shareholders.
Hedge fund giants Paulson & Co. and P. Schoenfeld Asset Management have announced to vote against the merger, saying that the combined company will have too much debt that will negatively affect its ability to compete with peers. However, MetroPCS told shareholders in a letter that the transaction addresses critical spectrum needs and competitive disadvantages of the company. The merger is a big step for MetroPCS Communications Inc. towards expanding into areas where it has little presence.
MetroPCS Communications Inc (NYSE:PCS) shares were down 1.38 percent to $10.35 at 2:17 PM EDT in New York trading.