One week ago, the Department of Justice gave Deutsche Telekom the green light to purchase regional carrier MetroPCS and combine it with T-Mobile USA. Now the Federal Communications Commission has approved the merger as well, leaving it up to the Committee on Foreign Investment and well as shareholders of MetroPCS to make a final decision one way or another.
The FCC said combining the nation’s fourth- and fifth-largest wireless carriers is a good deal for the public as the combined company would make a solid alternative to the industry’s larger companies like AT&T and Verizon. FCC Chairman Julius Genachowski said it will help the US maintain the global leadership in mobile it has regained in recent years.
As of now, Deutsche Telekom will pay MetroPCS $1.5 billion in cash for a 74 percent stake in the combined company. Combined with MetroPCS, T-Mobile would then have roughly 43 million subscribers. But as we touched on last week, it could be a tough sell to convince shareholders to buy into the deal.
Two of the company’s largest shareholders have already publically criticized the merger based on the valuation of MetroPCS and the $21 billion debt level that the combined company would have. MetroPCS said the combined debt leverage would be in line with historical averages and those of its peers.
The two shareholders also believe that 26 percent ownership simply isn’t enough and MetroPCS would be worth more as a standalone company. Shareholders are expected to vote on the deal on April 12.