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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.

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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.

Article printed from InvestorPlace Media,

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