MetroPCS Communications Inc (NYSE:PCS) shareholders have approved the company’s merger with Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) subsidiary T-Mobile USA. MetroPCS’s board approved it and recommended it to shareholders early last week.
The merger will not only add more than 9 million prepaid subscribers to T-Mobile USA, but also give it the wireless spectrum it needs in order to compete better with AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ). It’s expected that the merger will be completed by May 1.
MetroPCS Communications Inc (NYSE:PCS) shareholders including hedge fund manager John Paulson, pressured Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) for a better deal after the initial one was offered earlier this year. Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) then lowered the amount and interest rate of a loan it would make to the new company in order to comply with the requests of MetroPCS shareholders.
T-Mobile USA has been lagging behind other U.S. mobile carriers for quite some time. It shed 13 percent of its contract subscribers between 2009 and 2012 as the top mobile carriers in the country built faster infrastructure. Also T-Mobile USA did not get the iPhone on its network until last week, so many contract subscribers were opting for other networks simply because they wanted an iPhone.
The new company formed by the merger will offer a variety of mobile plans, including contract plans, no-contract plans, pay as you go and SIM-only. MetroPCS Communications Inc (NYSE:PCS) shareholders will receive $4.06 per share and shares amounting to 26 percent of the new company. The rest of the company will be owned by Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE).
MetroPCS is scheduled to report its first-quarter earnings tomorrow. As of the moment of this writing, the company’s stock was down .77 percent at the New York Stock Exchange.
