The merger of Deutsche Telekom AG (DTE)’s T-Mobile USA Inc. with MetroPCS Communications Inc. (PCS:US) will increase competition with larger rivals and benefit consumers, the companies said in a regulatory filing.
The companies made the arguments in papers they submitted Oct. 18 to the Federal Communications Commission. The companies will file later with U.S. antitrust authorities, according to the filing. Bloomberg News obtained a copy of the FCC filing.
Bonn-based Deutsche Telekom announced Oct. 3 it will pay $1.5 billion to shareholders of MetroPCS, the fifth-largest U.S. mobile provider, and merge the company with T-Mobile, the fourth-largest carrier.
The new company would have 42.5 million subscribers, according to data compiled by Bloomberg -- or about 11.7 percent of the U.S. wireless market -- compared with a 58.5 percent combined share for No. 1 Verizon Wireless and No. 2 AT&T Inc. (T:US)Sprint Nextel Corp. (S:US), the third-largest provider, has 15.2 percent
The acquisition probably will be approved because it doesn’t pose threats to competition like those raised by AT&T’s failed bid for T-Mobile last year, David Kaut, a Washington- based analyst with Stifel Nicolaus & Co. said in an Oct. 3 interview.
T-Mobile’s airwaves and MetroPCS’s complement each other, putting a combined company in a better position to compete than either could achieve on its own, according to the filing.
The new company, which will take the T-Mobile name, will keep MetroPCS as a separate brand and extend it to new cities, according to the filing. Customers will have access to more smartphones and tablet computers, the filing said.
By having more customers, the company will be able to distribute the fixed costs of its network over a broader base, giving it greater pricing flexibility, according to the filing.
The transaction doesn’t harm competition and strengthens the smallest of what the FCC has described as nationwide carriers, the filing said. It said the new company intends to be the leading low-priced carrier in the U.S., with a focus on offering plans attractive to customers seeking affordability.
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