Sorry, Sprint: T-Mobile Parent in Talks to Buy MetroPCS

A combination would still leave T-Mobile behind Sprint


Deutsche Telekom (PINK:DTEGY), which owns fourth-ranked U.S. wireless carrier T-Mobile USA, announced on Tuesday that it is negotiating the purchase of MetroPCS Communications (NYSE:PCS).

While the merger talks continue, Deutsche Telekom admitted that no deal has been agreed to yet and that “significant issues” remain unresolved, the Associated Press noted.

smartphone and globe Sorry, Sprint: T Mobile Parent in Talks to Buy MetroPCS
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Shares of MetroPCS, which jumped sharply on Tuesday after news of the talks broke, fell more than 5% in Wednesday morning trading.

Word of Deutsche Telekom’s move to buy MetroPCS comes just days after speculation mounted that Sprint (NYSE:S) might be interested in pursuing a major acquisition of its own. Both MetroPCS or Leap Wireless (NASDAQ:LEAP) were cited as potential targets for Sprint. Shares of Sprint dropped about 1% in Wednesday morning trading.

The combination of T-Mobile and MetroPCS would boost T-Mobile’s wireless spectrum holdings, but it wouldn’t catapult the carrier past third-ranked Sprint. Complicating any potential merger, the two companies currently use incompatible networks.

While any deal would need regulatory approval, the small size of both T-Mobile and MetroPCS is less likely to trigger anti-trust concerns.

Analysts sounded a skeptical note over the merger talks, noting that the combining two lesser players in the wireless market wouldn’t create an entity capable of challenging the dominant players like AT&T (NYSE:T), Verizon (NYSE:VZ) and Sprint.

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