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MetroPCS Is a Tricky Fit for Both Sprint and T-Mobile


MetroPCS Is a Tricky Fit for Both Sprint and T-Mobile

Photograph by Mary Altaffer/AP Photo

Bloomberg is reporting that Sprint (S) is considering countering Deutsche Telekom’s (DTE:GR) offer for MetroPCS (PCS), which would merge the regional operator with T-Mobile USA. If true, it could start a bidding war for the country’s largest Tier II mobile player. But what would Sprint gain if it won?

I’ve criticized the “T-Metro” deal because it foists together a CDMA operator and a GSM operator. Sprint and MetroPCS, however, both use the same CDMA technology, so you would think they would make perfect match. Well, it’s not so simple.

Sprint’s and Metro’s portions of spectrum don’t line up quite so neatly. Both have CDMA networks at the 1900 MHz PCS band, but many of Metro’s 2G networks and the majority of its 4G LTE networks occupy the 1700 MHz/2100 MHz bands Advanced Wireless Service (AWS) band, to which Sprint is a complete stranger. Sure, spectrum is spectrum: Sprint could just expand into the new band. But it’s not simple.

As this Mosaik Solutions map shows, MetroPCS owns a patchwork of licenses in different regions of the country. For Sprint to make full use of Metro’s LTE networks, it would need to fill in those holes with new AWS airwaves. But no one happens to be selling. The remaining AWS licenses have been locked up by T-Mobile, Verizon Wireless, AT&T (T), and Leap Wireless (LEAP).

The fact is that Metro’s combination of technology and spectrum really lines up only with other operator: Leap. In the case of T-Mobile and Metro, their spectra match perfectly, but their technologies don’t. With Sprint and Metro, it’s the opposite case: Their technologies are in synch, but their airwaves aren’t.

The Holy Grail for all the big operators these days is cobbling together nationwide 4G bands, which is why we’ve seen so much M&A and regulatory activity lately. AT&T wanted to create a super-4G band at AWS by buying T-Mobile. When that failed it began buying up new airwaves in the 2.3 GHz band and lobbying the FCC to approve those frequencies for 4G. Verizon just a closed its mammoth deal with the cable operators to buy up their 4G airwaves so it can launch a second LTE network across all the country’s major metropolitan markets. Sprint is shutting down its old Nextel iDEN systems to clear their 800 MHz airwaves for its own second LTE network.

Buying MetroPCS would give Sprint additional capacity in some important markets, such as New York City, Los Angeles, Dallas, and Boston. But it would also force it to maintain a separate LTE network that works in only a portion of the country. It certainly won’t help Sprint’s long-term 4G strategy, and it would likely create more problems for Sprint in procuring devices that work in its myriad of wacky bands. The deal might be worthwhile for Sprint, but like T-Mobile, it has to weigh whether that additional capacity is worth the money, time, and hassle of buying another carrier and integrating its customers with its networks.

To get in the middle of T-Mobile’s engagement with MetroPCS, Sprint would have to pay a $150 million breakup fee, according to Bloomberg. But despite the additional costs, Sprint will likely be very cautious about any new merger.

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Fitchard is a writer for the GigaOM Network.

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Companies Mentioned

  • S
    (Sprint Corp)
    • $6.22 USD
    • 0.12
    • 1.93%
  • DTE:GR
    (Deutsche Telekom AG)
    • $10.84 EUR
    • 0.17
    • 1.52%
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