Sprint might try to woo MetroPCS away from T-Mobile
Sprint may soon make an offer to acquire MetroPCS. This comes after Wednesday’s announcement by Deutsche Telekom of their intention to acquire MetroPCS for the purpose of merging it with T-Mobile USA. At this moment, Sprint is still weighing its options in making an offer. A merger of T-Mobile USA and MetroPCS would hamper Sprint's efforts to play a larger role in the consolidation of the wireless industry. Interestingly, this is not the first time that Sprint has considered buying MetroPCS, with Businessweek reporting:
The company abandoned plans earlier this year to buy MetroPCS after Sprint’s board rejected the transaction, which may have cost as much as $8 billion including debt, two people familiar with the plan said in February.
Sprint would need to beat Deutsche Telekom’s current bid of $1.5 billion. One obstacle that Sprint would face in making an offer would be the breakup fee which MetroPCS would need to pay. If MetroPCS were to back out of the merger with T-Mobile, it would owe T-Mobile $150 million. Sprint would have weigh this when putting together their bid, perhaps including an added $150 million in order to offset the fee.
One advantage for Sprint in all of this is the iPhone. With last year’s iPhone 4S, the iPhone finally came to Sprint. Both Sprint and Metro PCS are CDMA carriers, and a merger would give 9 million MetroPCS customers access to the iPhone. Conversely, T-Mobile USA is a GSM carrier, and, in addition to hardware integration difficulties, is the only one of the four major US carriers that does not carry the iPhone, at least officially. If Sprint were to acquire MetroPCS, it would also allow for an aggressive expansion of Sprint’s fledgling LTE network, giving them coverage in cities such as Boston, Los Angeles, and San Francisco. Both MetroPCS and Sprint utilize LTE band 25, making MetroPCS compatible, at least in part, with LTE on the iPhone 5.
What are your feelings on this? Which network should buy MetroPCS? Would it make a difference for either Sprint or T-Mobile? Let us know below in the comments.