T-Mobile/MetroPCS Merger Will Give Combined Carrier Better Spectrum, Network Reach, MetroPCS CEO Says
The proposed T-Mobile USA/MetroPCS merger will create a combined carrier with more spectrum and a wider network, MetroPCS CEO Roger Linquist said Tuesday during an investor call. If the deal clears and closes as expected next year, MetroPCS shareholders will get $1.5 billion in cash and 26 percent ownership of the merged carrier (CD Oct 4 p1). “We have spent the last couple of years looking to add spectrum to our current holdings,” Linquist said. “Combining our spectrum with T-Mobile’s spectrum portfolio is a significant strategic benefit in this transaction. In our current coverage areas, we have an average of 22 MHz of spectrum. Following this transaction, MetroPCS’s major metropolitan areas will have an average of 83 MHz of spectrum, almost a four-fold improvement."
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The merger will also put the combined company on a path to offer 4G LTE on the AWS band over a 20 x 20 MHz channel in several major markets, including New York City, Los Angeles, Dallas and San Francisco, Linquist said. “With this enhanced spectrum position, combined with MetroPCS’s vast coverage in urban areas, network performance and capacity significantly increases. This will enable a true broadband customer experience, and will provide for greater in-building coverage."
The merger will also allow the combined carrier to increase its network reach to more than 280 million possible subscribers, Linquist said. MetroPCS’s network currently reaches 102 million possible subscribers. “With the combination, we can bring the MetroPCS model not only to geographical areas that have limited pay-in-advance, no-contract wireless offerings, but we can also expand nationally, utilizing the T-Mobile network,” he said. “This expansion creates a value leader within the fastest-growing part of the wireless industry. At close, we have greatly expanded distribution. We are uniquely positioned to leverage this expansion of our business model.” Linquist and other carrier executives declined to answer most investor questions on the merger. MetroPCS plans to file a proxy on the proposed merger in mid-November, said Keith Terreri, vice president-finance.
MetroPCS had a mixed Q3 -- its net profit more than doubled, but it also lost more than 300,000 subscribers. The carrier had a net profit of $193 million for the quarter, up from a $69 million during the same period last year. Its revenue was $1.3 billion, above analysts’ consensus estimate of about $1.25 billion. The carrier said its financial picture also improved after it received a $53 million settlement on securities issues. MetroPCS lost 312,291 subscribers during the quarter, leaving it with about 9 million subscribers at the end of Q3. The company said 40 percent of its gross additions for the quarter were on its LTE network, and that 1.25 million of its subscribers are now on that network.
MetroPCS said it will launch its use of Rich Communication Services (RCS) technology Wednesday. The technology will be available on one of MetroPCS’s handsets Wednesday, with another 10 getting access to RCS by Nov. 15, Linquist said. RCS “supports social presence, simultaneous voice communication with multimedia messaging, as well as other advanced data services,” he said. “We believe that RCS will significantly differentiate our premium 4G LTE service from our competitors’ 3G data offerings.”