T-Mobile USA has officially completed its merger with MetroPCS Communications Inc (NYSE:PCS). The newly formed company will retain the name of T-Mobile US Inc. and will be based in Bellevue, Washington. It debuts today on the New York Stock Exchange under the ticker TMUS.
T-Mobile USA Inc.’s parent Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) received 74% stake in the enlarged entity, while MetroPCS Communications Inc (NYSE:PCS) shareholders received the remaining stake plus $4.06 per share in cash. Considering the capital injection and cash payment, the stock is expected to start trading in the range of $15-$16 per share. The deal has already received approval from regulatory authorities.
After the merger, T-Mobile US will have over 43 million subscribers and a larger holding of airwave licenses. Its total coverage has now reached 301 million people, of them 228 million have access to 4G. The newly formed company will be in a better position to compete with its bigger rivals like AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and Sprint Nextel Corporation (NYSE:S). T-Mobile US was left behind its peers in offering iPhones and building faster networks. The company started offering iPhones last month.
Earlier, MetroPCS Communications Inc (NYSE:PCS) shareholders had threatened to block the deal, saying that the terms were unfavorable. On April 10, Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) finally bowed to shareholder pressure, cutting interest rate and the amount of debt it will issue to the new company. The shareholder loan was reduced from $15 billion to $11.2 billion, and the interest rate was cut by half a percentage point. The revised terms received favor from Paulson & Co., the largest shareholder of MetroPCS.
Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) had earlier tried to sell T-Mobile to AT&T Inc. (NYSE:T) for $39 billion in 2011, but the deal was terminated due to opposition from regulators. In its merger agreement with MetroPCS Communications Inc (NYSE:PCS), Deutsche Telekom has agreed not to sell the shares of T-Mobile USA Inc. for at least 18 months.
MetroPCS Communications Inc (NYSE:PCS). shares were up 113.20% to $16.61 a share at 10:03 AM EDT.