Wednesday, October 3, 2012

T-Mobile and Metro PCS. Why Yes!

In May I wrote this post about why T-Mobile and Metro PCS should not hesitate to merge and not be too discouraged by the failed Sprint and Nextel merger. Today the companies finally announced their merger.

As expected, T-Mobile and Metro PCS have chosen a much more agressive merger time table than Sprint did. But in all fairness, T-Mobile and Metro PCS has an "escape route" in their common use of LTE as their 4G standard. This will make it possible to merge their networks in an efficient way and quickly shut down the Metro PCS legacy CDMA network. For Sprint and Nextel, there was no such common path forward which complicated matters in addition to management problems.

The most obvious reason for this merger is for T-Mobile to secure 4G spectrum in valuable markets. 

The merger will also be the opening salvo in what I suspect will become the final stages of market consolidation in the US wireless carrier market. The next candidate will probably be Leap Wireless, US Cellular or Clearwire. Interestingly enough, the most likely buyers in this market are T-Mobile and Sprint because Verizon and AT&T are probably shut out of additional mergers because of FCC or Department of Justice regulatory reviews.

If T-Mobile play their cards right, they can have a clean sweep of these merger opportunities since Sprint over the years have shown themselves prone to indecision and are at the moment very focused on getting out of the hole they are in.

This will be the end of large regional wireless carriers in the US market but as long as there are four or more national brands that compete, consumers should expect a competitive market.

Welcome back T-Mobile!

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