T-Mobile-MetroPCS Merger Can Reshape Wireless Market: 10 Reasons Why

 
 
By Don Reisinger  |  Posted 2013-04-24
 
 
 

T-Mobile-MetroPCS Merger Can Reshape Wireless Market: 10 Reasons Why


T-Mobile and MetroPCS might have taken awhile to get to this point, but finally, the two mobile-service providers are going to complete their merger.

After Deutsche Telekom made a play for the merger and regulators approved the deal, many of the regional carrier’s larger shareholders said that it wasn’t in the best interests of MetroPCS. They urged their fellow shareholders to not accept the deal. Ultimately, though, those efforts failed.

So, now T-Mobile and MetroPCS will come together to become one stronger competitor in the carrier market. So what does it mean for competitors? What does it mean for customers? Most importantly, what does it mean for the company itself? Answering those questions might not be easy, but it’s necessary in order to gain a fuller understanding of the wireless industry.

These are the reasons why the T-Mobile-MetroPCS union is important.

1. It’s now a bigger company

With T-Mobile and MetroPCS merging, the combined company is now a much larger concern for its competitors. Previously, T-Mobile was just a small worry for major carriers. It’s still dwarfed by AT&T and Verizon. But with the addition of MetroPCS’ assets now behind it, the combined firm has a greater chance of turning into a more vigorous contender in the marketplace.

2. Deutsche Telekom has more at stake

It wasn’t long ago that Deutsche Telekom was looking to get out of the U.S. market through an acquisition bid by AT&T. Now, though, the company is gearing up for wider involvement in the marketplace with its MetroPCS deal. Deutsche Telekom is a major company in Europe and one that top carriers in the United States might not want to go head-to-head with.

3. It’s all about spectrum

When it’s all said and done, what every carrier wants right now is spectrum. That is the most important asset MetroPCS brings to the table. MetroPCS has a network that T-Mobile can use to rapidly deploy its 4G LTE network around the country. There’s a finite amount of spectrum available, and all carriers want as much of it as possible. T-Mobile just acquired quite a bit more.

4. It’s all AT&T’s fault

Interestingly, AT&T might be the reason the merger between T-Mobile and MetroPCS happened in the first place. If AT&T had actually gotten through the merger deal with T-Mobile, the chances are MetroPCS would have remained an independent player. What’s more, T-Mobile gained billions of dollars through the failed purchase, which allowed Deutsche Telekom to make a move to expand in the United States.

T-Mobile-MetroPCS Merger Can Reshape Wireless Market: 10 Reasons Why


5. More regional carriers might get bought up

Now that MetroPCS is off the market, other regional carriers are likely to become inviting acquisition targets. Consolidation appears to be the name of the game in the mobile market. Look for larger firms to follow with regional carrier buyouts of their own.

6. Many MetroPCS shareholders didn’t like it

The merger between T-Mobile and MetroPCS is notable because the latter’s major shareholders didn’t want to see the deal happen. They believed that Deutsche Telekom was undervaluing MetroPCS and the company could do fine on its own. Now that shareholders have overruled those folks, the company has to prove that it will provide a strong return on the massive investment it made to buy up MetroPCS.

7. T-Mobile now has more market credibility

Prior to its MetroPCS merger, T-Mobile was really nothing more than an outlier among major carriers. But with MetroPCS now helping its operation along with the promise of better products and services in the coming months, T-Mobile has some real credibility with customers. And its star might rise because of it.

8. The iPhone plays a role

The iPhone could be a true game-changer in why the MetroPCS-T-Mobile merger matters. Until only recently, Apple wasn’t selling the iPhone on T-Mobile’s network. Now that it is, and now that T-Mobile is bigger, the other carriers need to worry a bit. If the iPhone still wasn’t available on T-Mobile’s network, who would really care what the company was doing?

9. What happens to Sprint?

Now that T-Mobile is larger and has the full backing of its parent company, what will become of Sprint? That carrier, which was the other “small” major network, is running short of cash and has two competing buyout offers that might or might not help its future growth. Sprint might soon become the least-important major carrier. And if so, it’ll fall out of grace with its customers very quickly.

10. T-Mobile puts no-contract pressure on competitors

One of the key aspects of T-Mobile’s sales pitch is the contract-free service plans it’s offering to customers. Now, MetroPCS customers will have the same options (and products and services) available to them, making them a bit happier. That could put pressure on other carriers to follow suit with contract-free terms. Expect the T-Mobile-MetroPCS merger to be a true game-changer in the wireless market.

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