Deutsche Telekom says that it has reached an agreement with MetroPCS to combine the smaller prepaid carrier with T-Mobile USA, its nationwide U.S. wireless operator.
Deutsche Telekom, parent company to T-Mobile USA, said Wednesday it has struck a merger deal with prepaid regional carrier MetroPCS.
According to the agreement, MetroPCS shareholders will get $1.5 billion in cash and a 26 percent stake in the combined company. Deutsche Telekom will own the remaining 74 percent of the company.
The deal requires regulatory approval from the Federal Communications Commission and U.S. Department of Justice. The deal is expected to close in the first half of 2013.
"We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom's position in the expanding U.S. wireless market," said René Obermann, Chief Executive Officer of Deutsche Telekom said in a statement. "The T-Mobile and MetroPCS brands are a great strategic fit - both operationally and culturally. The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network. We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment."
Deutsche Telekom hopes that by combining the two smaller wireless providers they will be able to better compete against AT&T and Verizon Wireless.
The companies will host a conference call at 10:30 a.m ET / 7:30 a.m. PT to discuss the transaction.