T-Mobile and MetroPCS mobile minnows merge
Taking on Sprint with LTE prowess
After failing to flog off T-Mobile USA to AT&T last year, Deutsche Telecom has gone another route, opting to absorb its smaller rival MetroPCS in a reverse-takeover.
The boards of both companies have approved a reverse merger, whereby MetroPCS will take over T-Mobile to form a combined company (called T-Mobile) that is owned 74 per cent by Deutsche Telecom and 26 per cent by MetroPCS, although the latter company's shareholders will get a $1.5bn cash windfall.
"This is not a deal to survive, it's a deal to thrive," said John Legere, CEO of T-Mobile in a video statement. "It's an aggressive plan to accelerate our return to market leadership."
That's a pretty bold ambition. MetroPCS has very good coverage in 14 city networks, including New York, San Francisco, and much of Florida, and more advanced LTE networks. Its nine million customers will give the new firm a combined footprint of 42 million users, compared to Sprint's 33 million, but still well behind the two market behemoths of AT&T and Verizon.
Both MetroPCS and T-Mobile are strong in the prepaid end of the market and both are using the offer of unlimited data, with T-Mobile a recent convert to that cause. Sprint's also a big player in that sector, while the big fish concentrate on the more lucrative contract side of the business.
"There are a lot of people in the US that have very low income, so it's a chance to really go after that segment," Julien Blin, directing analyst at Infonetics Research, told The Register. "It may also help T-Mobile get an iPhone, even companies like Cricket have one now."
The merger will also combine valuable spectrum and MetroPCS' more advanced LTE network. T-Mobile is still relying on HSPA+ for its "4G" service and will benefit from the smaller company's experience in rolling out LTE networks Blin said.
Assuming the deal goes through, nothing is going to change for customers until 2013, when the two companies will fully merge and concentrate on getting 20x20MHz LTE infrastructure up and running. Given that the prepaid market sees a lot of handset turnover this shouldn’t be an issue for most users. ®
Worth pointing out that the claim T-Mobile "relies on HSDPA" for 4G is outdated. T-Mobile has "refarmed" it's bandwidth (as Michael Jennings explains) in at least one city (Las Vegas). If you have an unlocked iPhone 5, T-Mobile will happily set you up with a nano-squinky-femto SIM and you'll enjoy whatever it is people enjoy about iPhones.
(Icon because it's Las Vegas, home of the National Atomic Testing Museum...)
It's only the iPhone really.
There's a 1700MHz (AWS) version of the Samsung Galaxy S3. There's an AWS version of the HTC One X and One S. Nokia's phones are mostly multi-band including AWS. Apple is the only big hold-out, but this costs T-Mobile dearly, yes.
T-Mobile knows this, and is therefore repurposing the AWS spectrum for LTE, and switching its 3G (HSPA+) network to 1900MHz as 2G GSM (that presently occupies that band) declines. This is compatible with what everybody else is doing. AT&T is rolling out LTE on AWS (as well as 700MHz) and so likely will Verizon at some point. The iPhone 5 supports LTE on AWS already, so once T-Mobile does this they will have a network using the same bands in the same way as AT&T, so the same phones that work on AT&T will work on T-Mobile as well.
This merger gives T-Mobile more AWS spectrum (some of it with LTE deployed in it already), and more 1900MHz spectrum. When the CDMA network being used by MetroPCS is phased out, they will be in a position to have extensive 3G and 4G networks that are compatible with everyone else.
In the short term, T-Mobile will post-merger have a situation where former T-Mobile customers and former MetroPCS customers will be roaming from different 3G networks to the same LTE network, and at some point where the CDMA 3G network of MetroPCS will have to be switched off without too many customers losing coverage. That will be a good trick if they manage it.
If you're one of the (let's be generous) 1.5 million people living in one tiny area of the USA, and you ask your wireless provider, they'll let you connect your phone to their network. I don't think that makes *anything* said about their network outdated.