Please ensure Javascript is enabled for purposes of website accessibility

T-Mobile and Metro PCS Get Hitched

By Anders Bylund - Oct 3, 2012 at 1:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If at first you don't succeed, try your pickup lines in a different bar.

A year ago, Deutsche Telekom division T-Mobile USA was watching its engagement with AT&T (T 1.27%) fall apart. Adding T-Mobile to one of the two largest telecoms in America was ultimately deemed to be bad for consumers, the deal was blocked by regulators, and Ma Bell handed over a generous breakup fee.

Well, if at first you don't succeed, you go back to the bar with a new set of pick-up lines.

The rumor mill has been busy lately, suggesting that the fourth-largest network might hook up with Sprint-Nextel (S), Leap Wireless (NASDAQ: LEAP), or MetroPCS (TMUS 1.98%).

All this rumor-mongering can wear on one's nerves, so T-Mobile decided to make it official today: The lucky partner is prepaid service expert MetroPCS.

Regulators are not likely to shoot this deal down. Rather than reducing consumer choice by making a leader even stronger, this combination adds muscle to one of the little guys in the wireless market. The 9 million MetroPCS subscribers plus 33 million T-Mobile users add up to 42 million, still light-years behind dueling elephants AT&T and Verizon (VZ 0.83%), and smaller than Sprint's 56 million subscribers.

If approved by all necessary parties, the deal should close by next summer. T-Mobile then becomes a publicly traded company thanks to a reverse-merger deal structure. MetroPCS investors were hoping for a bigger price tag, judging by the stock's 8% price drop on the news. But MetroPCS still trades about 7.5% higher now than it did a week ago, and 120% above the rock-bottom lows that were set in June. I'd be surprised if MetroPCS shareholders vetoed this marriage.

The mobile landscape is changing fast. The Fool has compiled a special report on this trillion-dollar revolution to help you sort the long-term winners from the losers. The report is totally free for a limited time, so get your copy right now.

 

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

T-Mobile US, Inc. Stock Quote
T-Mobile US, Inc.
TMUS
$146.46 (1.98%) $2.85
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$45.15 (0.83%) $0.37
Sprint Corporation Stock Quote
Sprint Corporation
S
AT&T Inc. Stock Quote
AT&T Inc.
T
$18.27 (1.27%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.