US Justice Department won't intervene in T-Mobile, MetroPCS merger

**SERO wireless** · 03-07-2013, 12:50 AM

Won't happen. The deal saddles Metro with too much debt and forces them to pay ridiculous interest rates to Deutsche Telekom. Paulson & Co. (Metro's largest shareholder) has said they and now P. Schoenfeld Asset Management (hedge fund who also owns a big chunk of Metro) says they'll vote against it too. The vote has been bumped to April 12th. I expect Metro's shareholders will vote it down and wait for a bidding war between Sprint, Dish and TMO.

Without a way to build towers FAST Dish's existing satellite spectrum will go back to the FCC. Sprint wants Dish's spectrum, but Dish hasn't been reasonable in their negotiations. By paying top dollar for Metro, Sprint gains a CDMA network and closes the door for Dish forcing them to either sell Sprint their spectrum cheap or join forces with TMO. I predict Dish will be be cutting a deal with TMO just to spite Sprint when the dust settles.

The Metro-TMO deal was a bad idea from the beginning. Metro runs a prepaid CDMA network with an older, slower LTE technology that isn't as fast as TMO's HSPA+ network. While they could convert Metro's network to GSM eventually at great cost they would also have to force all of Metro's existing customers to replace their existing CDMA handsets. That's hard - harder because Metro's prepaid plans require the customers to pay for their phones 100% out-of-pocket.

**jimmiekain** · 03-07-2013, 08:14 PM

Im just curious... if this deal goes through will it end up being like the sprint acquisition of nextel? Or, will they actually use the spectrum anytime this decade?

**SERO wireless** · 03-08-2013, 11:24 AM

The Sprint/Nextel deal was very different. The FCC said that because the 800 MHz was set aside for first responders (police, fire, ems), Sprint couldn't just re-purpose it. The FCC recently reversed that decision. There are no special conditions on Metro's spectrum though.

The problem is that all of Metro's equipment is CDMA while TMO's is GSM. Mergers make sense for reasons of synergy or economies of scale but the TMO/Metro deal offers neither of these things. TMO would have to rebuild all of Metro's equipment to convert it to GSM so TMO customers would be able to use it. In the process all of Metro's customers would need to replace their handsets. There would be ZERO overlap - one day your phone would work and the next it wouldn't. Of course, network upgrades don't turn on a dime so you wouldn't be able to say with any certainty when the change would take place in a given area. TMO would have to kick all of Metro's customers off the network and then ask them to buy new hardware and come back. I suspect few would. The only way around this would be for TMO to make some special edition crossover phones that would work on GSM and CDMA but there are too few customers to get an economy of scale and let's face it, DT is too cheap to do this

Ry · 03-08-2013, 12:07 PM

Originally Posted by SERO wireless

The Sprint/Nextel deal was very different. The FCC said that because the 800 MHz was set aside for first responders (police, fire, ems), Sprint couldn't just re-purpose it. The FCC recently reversed that decision. There are no special conditions on Metro's spectrum though.

The problem is that all of Metro's equipment is CDMA while TMO's is GSM. Mergers make sense for reasons of synergy or economies of scale but the TMO/Metro deal offers neither of these things. TMO would have to rebuild all of Metro's equipment to convert it to GSM so TMO customers would be able to use it. In the process all of Metro's customers would need to replace their handsets. There would be ZERO overlap - one day your phone would work and the next it wouldn't. Of course, network upgrades don't turn on a dime so you wouldn't be able to say with any certainty when the change would take place in a given area. TMO would have to kick all of Metro's customers off the network and then ask them to buy new hardware and come back. I suspect few would. The only way around this would be for TMO to make some special edition crossover phones that would work on GSM and CDMA but there are too few customers to get an economy of scale and let's face it, DT is too cheap to do this

Sounds like more of a spectrum play.

Also - isn't it easier as MetroPCS customers are month-to-month vs. on long-term contracts?

**hokiesteve** · 03-08-2013, 03:20 PM

Originally Posted by SERO wireless

The Sprint/Nextel deal was very different. The FCC said that because the 800 MHz was set aside for first responders (police, fire, ems), Sprint couldn't just re-purpose it. The FCC recently reversed that decision. There are no special conditions on Metro's spectrum though.

The problem is that all of Metro's equipment is CDMA while TMO's is GSM. Mergers make sense for reasons of synergy or economies of scale but the TMO/Metro deal offers neither of these things. TMO would have to rebuild all of Metro's equipment to convert it to GSM so TMO customers would be able to use it. In the process all of Metro's customers would need to replace their handsets. There would be ZERO overlap - one day your phone would work and the next it wouldn't. Of course, network upgrades don't turn on a dime so you wouldn't be able to say with any certainty when the change would take place in a given area. TMO would have to kick all of Metro's customers off the network and then ask them to buy new hardware and come back. I suspect few would. The only way around this would be for TMO to make some special edition crossover phones that would work on GSM and CDMA but there are too few customers to get an economy of scale and let's face it, DT is too cheap to do this

Don't forget that CDMA is a dying technology and metroPCS was already working to migrate users to VoLTE. Under TMobile the transition might be different but with the same goal of phasing out CDMA.

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**jimmiekain** · 03-09-2013, 10:40 AM

@SERO wireless

My understanding was that it was only for spectrum. Is that incorrect?

Sent from my Nexus 4 using Tapatalk 2

**SERO wireless** · 03-09-2013, 07:10 PM

Nope. TMO was originally planning on offering 10x10 LTE. With the MetroPCS spectrum they will be able to offer 20x20 LTE - but only in 11 major cities! MetroPCS is a regional carrier so their spectrum isn't nationwide. Even with Metro's spectrum TMO will still be stuck with 10x10 in some BIG markets (Chicago, Washington, DC). There will be some gains from the spectrum but the other add for TMO is economies of scale from Metro's 9.5 million customers. TMO hopes this will enable them to lower their prices on data plans.

**SERO wireless** · 03-09-2013, 07:19 PM

Originally Posted by Ry

Also - isn't it easier as MetroPCS customers are month-to-month vs. on long-term contracts?

Metro's mtm plans are very similar to TMO's new, "no-contract" business model. The problem for TMO will be keeping Metro's customers since there aren't any contracts or phone compatibility issues holding them in place. The MVNO market is smoking hot right now and there will be no shortage of competitors eager to lure away Metro's former customers.