Another Major MetroPCS Investor Voices Concern Over T-Mobile Merger


For the second time this week, another major MetroPCS investor has voiced concern over the terms of the T-Mobile merger. Paulson & Co., the biggest MetroPCS shareholder with an 8.7% stake in the company is said to be withholding its decision on whether to vote for the transaction until it sees the final proxy statement.

Paulson says the combined company ““has too much debt, the interest rate on Deutsche Telekom’s debt financing is too high, and the exchange ratio is too low for PCS stockholders,” said Paulson. “It may be more prudent for PCS to remain independent and explore other higher value alternatives.”

Earlier this week, P. Schoenfeld Asset Management, which owns a 2% stake in MetroPCS also voiced their concerns over the proposed terms of the transaction. Schoenfeld is looking to recruit other investors to oppose the transaction or find more favorable terms.

“Shareholders deserve a capital structure that reflects reality in the marketplace and Deutsche Telekom’s confidence in the new T-Mobile/Metro PCS business plan,” Peter Schoenfeld, chairman and chief executive officer of P. Schoenfeld Asset Management, said in an interview.

Deutsche Telekom didn’t respond to comment on Paulson’s position, but released a statement earlier this week in response to Schoenfeld stating that the combination of both companies will benefit all shareholders as well as customers of the combined entity.

“The MetroPCS board of directors believes that the proposed combination with T-Mobile is in the best interests of MetroPCS and all MetroPCS stockholders,” MetroPCS said yesterday in a statement.

Jonathan Chaplin, a New York-based analyst says the combined company will need to cut around $6.6 billion debt, or 44 percent of the total debt to be “fair to shareholders and give the new wireless carrier a chance.”

“PCS shareholders are worse off for this deal,” Chaplin said. “And the debt is so large that if things don’t go according to plan, the equity value could evaporate quickly.”

While regulatory approval is still in the works, it’s going to be interesting to watch and see just how much of a fight these groups of investors will mount to block the deal. Finding another buyer for MetroPCS could prove difficult given the other likely suspects in Sprint, Dish and Clearwire are now all engaged in their own transactions.

Deutsche Telekom and MetroPCS still expect to wrap the deal up before the end of the Summer.



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  • TBN27

    So if this fails, now what? T-Mobile goes ahead on it’s own and just try to build out with what it has? Not that it won’t pass. Or is it that the stock holders are being greedy and are now saying that the company has too much debt?

    • vjballa21

      tmobile will build out LTE with or without metro. they have already started to turn them on. It is on here in Las Vegas

      • mario

        do you have an LTE phone? how are the speeds ?

      • Eric

        Yes, but T-Mobile needs all of Metro’s spectrum to hold successful LTE roll-outs in the coming months. The problem is that T-Mobile and Metro won’t combine LTE bands until 2015, so you’re either on T-Mobile’s LTE or Metro’s LTE.

    • Bratty

      To oversimplify things – yes, stockholder have to be greedy as you say. That is kinda their job.

    • Baxter DeBerry

      TMobile will continue to build out their network either way, what they would probably do is offer Metro’s Stockholders a bit more money to get the deal passed.. I for one will have a uproar if Metro merged with the likes of ATT or Verizon.. both of which don’t need metro to begin with. At the same time Metro no longer has enough spectrum to keep goin, their LTE in most markets are more like 3G, If metro can get its hand on some spectrum then who knows what will happen

  • bleeew

    So T-Mobile owes DT that debt? Or who does it owe it to?

  • Them them them

  • Josue

    so who owns who

  • U.S. is in eighth place for lte speeds so the fcc need to get ahold of more specturm for the U.S. cellular providers

    • SouthernBlackNerd

      ATT and Verizon have enough spectrum. The reason their speeds are slow is because they are building their network for coverage, not density. Once they have their coverage complete, they will go back and fill in areas that are getting strained, which will increase speeds. They will also start deploying WCS(ATT) and AWS(VZ). After that they will likely start refarming, since people will be moving off their 3G networks.

      Tmobile and Sprint need more spectrum, but that spectrum needs to be in the sub 1Ghz band for coverage not capacity. Tmobile probably needs more for capacity, but they could wait for the next AWS auction or buy Dish’s spectrum for super cheap, since it seems like Clearwire is going to be owned by sprint and their CEO has said they have no plan B yet.

      Even with the need of more spectrum, Tmobile has already announced that in the future they will deploy 20×20 LTE in some markets. That should give those customers peak speeds of 150Mbps.

      Softbank CEO mentioned slow speeds in his press conference, so I could see them deploying 20mhz TD- LTE of Clearwire spectrum initially in major Metros to get speeds in the 90s and 100Mbps.

      • Baxter DeBerry

        agreed, ATT and Verizon have way more than they prob need, T-Mobile and Sprint are the ones that are hurting badly one of the reason why T-Mobile hasn’t upgraded their systems in so long was cause they ran out of spectrum.. and the willingness to compete anymore

      • greatly spoken !

  • NYCTheBronx

    Let’s all hope they do close the deal before summer. I hope this doesn’t affect the launch of LTE advanced. I’ve been patiently waiting. Anyone got the 4.2.2 update yet for LG GN4?

    • robertc

      Hasn’t been said that the update would take lte off the nexus 4?

      • jarhead

        I’m not sure if it took it off but your not allowed to put the phone on lte only anymore.


      YES i got it two days ago,,,,,,,SWEETNESS

  • Mark Reese

    why don’t they just add a billion on top of the deal.

  • guest911

    These investors are controlled by a puppet master, Sprint. Probably.

  • sushimane

    the shareholder needs to stop being greedy and just accept it metro pcs is a regional carrier not much coverage anywhere other then where they are now and profit wise. if they combine with tmobile they own 37% of the new company that’s better then being own completely. if the deal doesnt work tmobile can always go after dish for their spectrum sense their deal with clearwire isnt going so well. or even better teaming up with google. ever since i read about google testing phone on a google frequency they purchase awhile ago makes me wonder lol. G-mobile lol

  • D Velasquez

    SoftBank should have buy T-Mobile instead of Sprint….

    • Trevnerdio

      Noo…we don’t want a Japanese owned cell company.

      • D Velasquez

        of course we do, we probably could get even far better phones than the HTC M and everything Verizon and at&t have combined also most likely a better coverage.

  • I just seen what guest911 shared, I thought the same exact thing. My first thought was someone from a different Carrier is reaching out to these investors and maybe slipping them a few bucks to maybe change this entire deal. Sprint has the most to loose, they could be the # 4 Carrier very soon. T-Mobile will have more of their LTE Hardware in place and live before Sprint can get off their asses. With the Metro PCS deal in place and moving forward it puts T-Mobile in a great place for the future. Yep I would not bet against Sprint being behind this entire bull shit. Just my opinion.

    • SouthernBlackNerd

      Sprint has their own investors trying to foil their plan to take over Clearwire, plus I am sure Sprint knows trying to buy part of USCC, Clearwire, Softbank Merger are already a ton on their plate. Trying to throw Metro on top of that could spell disaster for them. FCC/DOJ could attempt the block the deal because of so many moving parts.

      The Sprint brand is growing, while Tmobile has become stagnant in their growth. Even Metro has been losing subscribers. I think we should wait until the reverse is happening before we dub that Tmobile will pass Sprint.

      Metro deal makes Tmobile more formidable, but they need to stop focusing on only giving urban areas if they want to become the 3rd largest carrier.

      • conservative_motorcyclist

        Agreed. They need more build-out in rural areas. It sucks going up to NH and being stuck roaming on barely-Edge while my friends with Verizon and AT&T get full 3G/LTE

  • Whitney

    If this fails Metro PCS sucks

  • Deaner

    T-Mobile is a drowning being just grasping at everything it can possibly get its hands on before going under. That is all.

    • Bajamin

      You clearly don’t understand what this deal is really about.

  • Rick Rudge

    Excuse me, but isn’t MetroPCS just a little independent mobile business inside Sacramento, California? I know that T-Mobile isn’t very powerful in the Central Valley of California, but if this deal does fall through, is it all that big of a deal?

    • Baxter DeBerry

      actually its bigger than just California, MetroPCS covers some of the major markets in the USA, Fort worth/Dallas, where im near currently T-Mobile lacks the spectrum needed in Texas as well as other markets for the LTE roll out.. Don’t underestimate how big Metro really is

      • Rick Rudge

        Thanks for the insight, Baxter. I didn’t know that.