Deutsche Telekom, MetroPCS Merger Expected To Close Before June 2013

Deutsche Telekom Chief Financial Officer Timotheus Hoettges told a German newspaper he expects to close the merger of the company’s US unit and MetroPCS sometime before June 2013. Of course, all that assumes the MetroPCS board votes in favor, regulators give their blessing and Sprint doesn’t try and outbid Deutsche Telekom.

“The transaction is not likely be carried out until the second quarter of 2013″, Hoettges told daily Boersenzeitung.

The timetable seems reasonable given the amount of time it can take for US regulators to complete their approval. The deal is expected to boost T-Mobile USA to a more independent state not reliant on their parent company for financial support. Along with financial independence, it’s anticipated that Deutsche Telekom will use this transaction as a way to exit the US market completely if it so chooses.

Reuters

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  • Stets!

    It’s All Stetson’s Fault!!!

  • Jose Hernandez

    I have a question David, On the October 3rd post, it says “both boards have approved a $1.5 billion dollar deal.” But now the posts are saying if the MetroPCS board votes on it? Did the MetroPCS board already vote to accept this merger? are they voting again?

    • philyew

      The deal requires MetroPCS shareholder approval. I think the outstanding vote will be at a shareholders meeting, voting on the recommendation of their board, which is what has already been voted upon.

      However, Friday’s lawsuits from MetroPCS shareholders against the deal may have some bearing on all of this before a vote can take place.

      http://www.opposingviews.com/i/society/shareholders-fight-metropcs-t-mobile-merger

      • $6143719

        I call BS on that. It doesn’t matter how high a stock traded in 2011 if they are selling here and now. That’s the risk they all take and are trying to be bought out at a higher price.

        • philyew

          Of course…but DT kind of brought this on themselves by declaring that they already had a counter-bid prepared, in the event that another buyer stepped into the frame.

          While that would have been a shot over the Sprint bows, it is now largely irrelevant as Sprint will be consumed by the Softbank takeover for the next 6+ months. Unfortunately, what it also did was signal to MetroPCS shareholders that there is more money in the pot, if they can squeeze hard enough.

          As I understand it, the MetroPCS board control a relatively small proportion of the company’s shares. There may well be something to the claims in the lawsuit that the interests of the board members have been looked after disproportionately to those of the mass of shareholders.

          While the $18 share valuation is fanciful, the $4.09 compensation for halving the shareholding, together with the opening price of the newco shares, is probably not full compensation for the current MetroPCS share value.

    • Todd

      I think he meant “shareholders” and not board for the upcoming vote.

      • philyew

        Agreed. I posted something to that effect a while ago, but it’s still awaiting moderation because I also included a link to an article reporting that two lawsuits have emerged from MetroPCS shareholders vigorously opposing the proposed deal.

        There’s a lot more to go down before that shareholders meeting takes place.

  • Aurizen

    Im waiting for the FCC approval once that happens we know thats good to go, I cant wait to see this merger!

  • kevev

    I love that image. Very funny.

  • archerian

    With Softbank’s support, Sprint could rally and outbid for MetroPCS. There is a consolidation of mobile operators happening in several places across the world, this could be the start of the same in the USA. If the rumored investment is $19B, that’s enough money to buy T-mobile too, although chances are DT will wait around for a better price.

    • jon

      You’re missing one HUGE factor. The United States govt has made it clear that there will be four major carriers in this country. For the sake of competition and innovation this will be the governments position. That means sprint will never be able to consolidate with tmob. It doesn’t matter who owns sprint. Softbank or no Softbank. They may very well go after metro, but tmob is out of the question. The US govt has spoken loud and clear. Why do people want to continue to beat a dead horse?

      • archerian

        The key is competition, not number of carriers. The first two are far too ahead for Sprint and T-mobile in sheer revenue, size and customer base. Regardless of whether they merge or not, a merger between the 3rd and 4rd largest player wouldn’t be blocked for anti-trust reasons as it does not create a monopoly or restrict competition/innovation, especially when the merged entity is smaller than the size of the 2nd player in almost all fronts except maybe spectrum.

        • jon

          You simply didn’t comprehend the govt case for shutting down the at&t deal with DT. They made it clear they want 4..count with me 1,2,3, and 4 national carriers. Lol. Why don’t you think sprint and tmob have attempted such a deal post at&t breakup with tmob? Let’s not forget DT and sprint were in talks for some type of merger pre at&t deal. Hint: that’s more of a rhetorical question. We all know the answer. Because…say it with me; the US Government would reject such a merger.

        • Get_at_Me

          Theres a few different ways to look at a tmo sprint merger…it would create a sizable opponent to vzw and att which is good for competition. A tmo/sprint merger could really put pressure on vzw and att….at the same time, all three companies could employ similar pricing and practices that would leave consumers with little choice. Look at what att and vzw do now. Their pricing and policies are nearly identical.

        • archerian

          You seriously think the Govt blocked the ATT-Tmobile deal because they wanted FOUR carriers? Why, is 4 a lucky number for them? The Govt cannot simply block a deal unless it hinders competition/monopoly/anti-trust or due to security concerns, and if it comes to it, they must prove it in court. That deal would have left only one major GSM/UMTS player in the market, and lead to lesser competition. Read up on anti-trust policies of the DoJ and how it applied and enforced. The ATT-Tmo merger is nothing like a potential Sprint-Tmo merger, using that as an example of how the DoJ or FCC would evaluate it is possible, but the final decision will most probably not be the same.

          Sprint and T-mobile didn’t attempt a merger post ATT-merger fail as T-mobile got spectrum and money to modernize its network while Sprint got stuck with a $15B over 4 years iPhone tab. A major hurdle was technological differences, and Sprint’s short term dalliance with Wimax. Merging CDMA and UMTS networks on such a level would be tough, but once everyone is on LTE, it is a lot easier, and Sprint shelved Wimax for LTE. Currently, Tmo has a robust roadmap to network growth, although how they can stem losses to user base has to be seen. Earlier, they didn’t have enough cash and spectrum for a good LTE rollout, hence the talks for a merger. At this point, they don’t need a merger, but their parent DT eventually wants out. I’m not saying that next month T-mobile and Sprint may merge, but a few years down the lane, it is a possibility. With a consolidation route, chances are Sprint would acquire Leap, T-mobile MetroPCS and eventually they merge for become the 3rd major player. T-mobile is getting squeezed by Trac and other prepaid vendors in the value market, lower pricing might not be the only option going forward.

        • jon

          The deal sprint and DT were working on had nothing to do with sprint purchasing DT. The deal would have actually been between clearwire and DT. Sprint was ready to sell DT majority stake in clearwire. And then work out a long term roaming deal. So your logic about sprint dealing with iPhone debt doesn’t hold up. Sprint stood to gain a massive cash infusion if this deal went though. T-Mobile, by the token, just had billions dumped into their lap by the failed at&t deal. T-Mobile was also operationally ripe for a merger. They had cut their workforce drastically through attrition. If ever there was a time to work out a sprint/tmob deal, it was then. The only valid point you make is that in the WAY future a merger will be easier since everyone will be using the same network technologies. But so what. The FCC and doj made it clear it wanted four carriers. I intensely followed these things since my wife is a manager for a tmob call center and has been so since the days of voicestream. We have heard rumors for YEARS about a sprint merger. I happen to believe law makers have put this one to bed.

        • SouthernBlackNerd

          Sprint was trying to sell Clearwire? BS. Sprint would have the least amount of spectrum( less than 50Mhz average) if they let Clearwire go. No way Sprint ever lets Clearwire go. Without Clearwire’s spectrum, Sprint has no extra spectrum to deal with capacity. Sprint letting go of Clearwire, would be sprint signing its own death certificate.

        • jon

          Yes sir I believe they were. Dan Hesse and a few other sprint execs stepped down from the board of directors of clear wire maybe a month or two months prior to the at&t deal. I believe this was done to pave the way for DT to purchase majority stake in clear wire. I then believe there was going to be a lease/roaming agreement for the use clear wire assets by both tmob and sprint. Notice I say, this is what I believe to have happened..I cannot prove it because the events never came to fruition. But if anyone has a season why Hesse and his pals resigned their posts at clear wire and then got really, really upset once tmob announced the at&t deal; I’d love to hear it..

        • SouthernBlackNerd

          Keep Sprint’s sinking ship a secret from investors. If Sprint owns too much of clearwire, then Clearwire’s debt is on sprint’s books, which would make their financial situation even worse than it already was( just a few months ago their stock was at 2 dollars and falling). Sprint has been keeping clearwire afloat, but at arms length to not sink their own ship. Sprint was likely going to absorb Clearwire when they had better financial footing after shutting down their iDEN network in 2013.

          I highly doubt sprint had any intentions of letting clearwire go. In cities like Atlanta or Chicago, Sprint only has 30mhz of PCS total. Plus, they can only use 3x3mhz of their 800mhz spectrum. Clearwire would allow them to add another 60+mhz in those markets. They could have proposed to sell some of the surplus spectrum, but I doubt it. Sprint selling all of Clearwire would have been them signing their death certificate.

        • archerian

          You’re claiming Sprint was planning to sell a majority hoard of its LTE-TDD capable spectrum to its rival and enter into a roaming agreement? What roaming agreement would they hope to achieve, being from differing technologies? The ATT-Tmo merger was announced in Mar 2011 so any deals were off the table between Tmo and Sprint, and Sprint got the iPhone late Oct 2011, so how did Sprint hope to get a cash flow from deal with Tmobile that was already cancelled? On the flip side, once the merger was called off, T-mobile gained cash and spectrum for a more planned LTE roll-out on LTE-FDD, which were major obstacles for them. How could Tmobile, when it has its near future spectrum and cash needs met, agree to a merger? It parent DT would have wanted out, but at a good price that Sprint might not be able to afford now. Consolidation doesn’t happen overnight, like I said it is a possibility in in a few years. And you still keep talking about the four carriers – just because the FCC and DoJ want four carriers doesn’t mean it will be the case in the future when LTE will become common, they will have to evaluate and if they form a case, win.

        • jon

          Also read David’s article here http://www.tmonews.com/2011/12/with-att-out-of-the-picture-where-does-t-mobile-go-now/
          I think even the guy that runs this blog agrees with me. He might be the only person here that follows tmob closer than me.

        • archerian

          For someone who claims to be “closely following T-mobile” more than anyone here bar one, your comments just don’t seem to support the facts and measure up to your claim

        • philyew

          Surely the common future in LTE use not only makes network consolidation much easier, but also greatly reduces the significance of the argument about a GSM monopoly?

          Rather than stipulating that the market should have 4 major competitors, I thought the supporting arguments in the anti-trust action against the AT&T takeover raised some important points of principle that would make it difficult to justify a future TM-Sprint merger without a complete flip-flop on those arguments from the DoJ.

          While it seems that the $39 billion offer from AT&T significantly overvalued TM in today’s market, it’s unlikely that DT would entertain an offer of less than half that amount, considering their initial investment in setting up TM USA a decade ago amounted to over $50 billion. The current deal, with its ability to turn TM USA into a publicly listed company, is by far the best option for DT and they will be willing to throw more in the pot to make it happen.

          However, news emerged on Friday that this article does not consider: apparently there are two lawsuits from MetroPCS shareholders against the current deal.

          http://www.opposingviews.com/i/society/shareholders-fight-metropcs-t-mobile-merger

          DT will surely have to up their offer to prevent this from derailing their plans.

        • archerian

          I agree, DT wants to ultimately exit the US market, and they have an option with MetroPCS to offer a counter offer to any better external offer. Having MetroPCS spectrum makes it more attractive in any later re-organization plans.

        • jcj1

          DT just wants money, if TMO US becomes even more profitable they are not going to give it up. Heck, right, now TMO US is 1/3 of their profits

        • galaxymaniac

          Tmo US makes up only around 25% of DT’s total revenue and they were at an Operating Loss in 2011.

        • UMA_Fan

          Although it’s true the Government has SAID they want four national carriers the truth is the Government does NOT have the power to outright block companies from merging. The only thing they can do is sue to block the transaction on the grounds of anti trust. So they have to have a case to win.

          At the same time consolidation of carrier 3 and 4 would face heavy government scrutiny. I also believe there are new laws that state mergers can not result in a market that diminishes competition. Courts could interpret that any way they want.

          Anyway, it seems like a potential regulatory head ache that DT would not feel as being worth it.

        • jon

          I understand that the govt can sue to stop it and that is the extent of their abilities. However, if tmob or sprint’s existence was somehow threatened, do you not think the govt would step in and prop up the troubled company. In this day and age of bailouts, I’m afraid it has become the norm. I would phrase it this way; the govt has basically said the 4 national carriers are too big to fail. That’s a very strong statement to make but I believe that is where we are currently.

        • archerian

          I don’t think the Govt. would step in and “bail out” a troubled Sprint or T-mobile. More likely, IF that ever happens, they would enter Chapter 11 and perhaps there would be a sale of assets like Prepaid or Towers, if no alternate external source of funding can be found.

        • Anonymous

          you’re reading too far into the Softbank buyout. this only refers to STOCKS!! the Billions of funds from Softbank disappear the primary sprint stockholders pocket as a last second ditch attempt to exit a sinking stock value

          merger/ reverse merger are very complicated structured plans mostly depending on the future market shares. second, When DOJ can make any legal case it will generally mean those two parent companies must go back to strike a balanced deal within legal lines to allow the merger to clear. There are hundreds of laws that could be thrown into the mix with DOJ before approval stamp is finalized on the merger. DOJ can be railroaded by government officials / FCC overseeing the case. that’s what happened with AT&T, too much political attention from both political parties, no secret the republican had their hands in those sexy blue jeans, and the Obama camp slapped that deal down because it would had messed with labor reports and Obama’s re-election. so if one says “sue” this equates to block, same thing. who’s closer to the federal judge and prosecutors? who’s at a disadvantage? ATT is huge and powerful and filthily rich, still the government shot it down. you have no case that the government can not get involved because they simply do everyday they make those decisions in the white house informed by the cabinet. An educated guess would be the tipping point of merger will depend on who wins the presidency.

          most importantly, stockholder don’t just take a leap of faith, we’re talking about their hard earned life savings. private company files are swapped and shared to show the share holder that the road of profit making isn’t coming to a screeching halt. If everyone gets the idea they’ll be on the poor farm at retirement age, they’ll vote the merger down or vote to bump the member(s) of board out of control. board members like Steve
          blo Jobs were fired as director of board of their own created companies. just ask the guy that’s created best buy how it feels to be rich but not in control any longer

        • archerian

          unless the price is right and there is a juicy break-up fee to be had :)

        • stevejobbed

          As someone who was on the inside when the sprint/DT talks were going on, I can tell you that the only reason DT rejected the deal was because sprint wanted DT to assume all of its debt from Nextel and DT was not willing to do that. It had nothing to do with them not thinking the DOJ would sue or not to block anything.
          The Att/Tmobile deal was blocked because it would have meant that 1 major national carrier would have a monopoly on gsm technology. Now that everyone is going to LTE that would no longer be the case.
          Don’t be surprised if ATT or Verizon don’t make a future play for Tmobile or Sprint in the future, or look to buy a majority stake in Tmobile once they go public.

        • philyew

          It was known this time last year that everyone had a strategy for deploying LTE – everyone except TM that is. Had the AT&T acquisition taken place, that fact would have become irrelevant. So why do people continue to claim that the DoJ opposition to the takeover was primarily about the creation of a GSM monopoly?

          There may have been reasons to block the takeover, but the argument that a GSM monopoly would be significant outcome was probably the lamest of them all.

        • stevejobbed

          Read the DOJ documents, they address this very point..Full, reliable LTE deployment will not be available nationwide until at least 2015 at the earliest on any carrier to the point where consistent LTE service can be expected all over the U.S. The DOJ argued that if the merger would have gone through Att could effectively corner the market and raise prices until then, thus creating a base price structure that would be hard to break even with competition. Many people prefer GSM technology right now as it allows them to travel internationally without having to change phones and allows for them to purchase international handsets not available in the US. What do you tell those people until LTE is the standard? Hey wait a few years, I am sure this price gauging will stop?! The DOJ was looking at the immediate affects on consumers, and apparently they had a strong enough argument to kill the deal.

        • philyew

          I did read the DoJ documents. The argument was lame then as it is now, and it only made up one strand of their opposition.

          The major markets will be covered by LTE well before 2015 and it is those areas that will ultimately determine the carriers’ pricing strategy.

          As I argued back when the takeover was still “alive”, the issue about international travel was a red herring. Aside from it being relevant to only a very small proportion of the 300+ million mobile subscriptions in the USA, both Sprint and Verizon have carried devices capable of international GSM use for some time now, and that situation has only improved over the last year.

        • Whitney

          @jon Not true at all. They blocked AT&T T-mobile because it would create monopoly on GSM and it will have anti trust issues. Monopolies are illegal

        • Flyincloud

          It may not create a monopoly, but I can see a cartel as an result of Sprint purchasing T-Mobile. No more Unlimited anything, and the ratings would rise.

    • 21stNow

      This wouldn’t be the “start” of consolidation of mobile operators in the USA. Just 10 years ago, there were at least six national postpaid carriers in the US. Now there are four. That happened through buyouts and mergers. There were also several regional carriers that have been bought out by national carriers. This consolidation has been going on for many years in this country.

  • http://twitter.com/YepiimGS_Blanco Jay J. Blanco

    Ok so lets hurry this process up im ready for blazing lte so tmobile can put sprint att and verizon in their place fighting for second place

  • guest

    Sorry not sure where to post this so im posting it on here. For today only u can get SGS3 at Best Buy for $99.99 with a new contract or upgrade.

    • auser72

      Thanx, going to get one for the wife today.

  • Laststop311

    how does adding a cdma network into t mo’s gsm network benefit me as a current customer with a gsm phone and the 30/month pre-paid 4g data plan with 100 voice minutes, unlimited text and 5gb data that switches to unlimited 2g data after 5gb of 4g data, no overages and I haven’t seen 2g speeds yet as the most data I’ve ever used is 4.44GB.

    • archerian

      it doesn’t. any changes to T-mobile users and network won’t happen till 2015.