MetroPCS shareholders approve merger with T-Mobile USA

MetroPCS (NYSE:PCS) shareholders approved the company's merger with Deutsche Telekom's T-Mobile USA, clearing the final hurdle for the merger of the nation's No. 4 and 5 carriers in a move that DT hopes will strengthen its U.S. brand. DT had improved the terms of its initial offer to win over wary shareholders.

A MetroPCS spokesman told Bloomberg shareholders approved the deal this morning during a special meeting near MetroPCS headquarters in Richardson, Texas. According to figures provided by MetroPCS, around 93 percent of shareholders voted to approve the main provision of the transaction.

DT said the transaction is expected to close by May 1. The deal has received all necessary regulatory approvals.

"We are thrilled that MetroPCS stockholders voted to approve this transaction which delivers strategic and financial benefits," T-Mobile CEO John Legere said in a statement. "A combined T-Mobile and MetroPCS will unite two companies with one common vision: challenge the status quo and deliver exceptional wireless experiences for our customers. As America's Un-carrier, we will redefine the wireless industry."

"We are pleased with the outcome of today's vote and thank all of our stockholders for their support," MetroPCS CEO Roger Linquist added in a statement. "Our combination with T-Mobile will create the value leader in the U.S. wireless marketplace, and we are confident that the combination of these two outstanding businesses is the best outcome for MetroPCS and our stockholders and will maximize stockholder value.  We look forward to completing the combination shortly and delivering compelling value to the stockholders and customers of the combined company." 

On April 10 DT issued its "best and final offer" that slashed the amount of debt the combined company will hold by $3.8 billion. DT also said it would lower the interest rate it plans to charge on the loan by half a percentage point, cutting the loans to $11.2 billion from $15 billion. The revised offer addresses many of the concerns that MetroPCS shareholders had about the deal--specifically that the combined company would take on too much debt.

Under the terms of the transaction, MetroPCS will engage in a reverse-merger with T-Mobile and DT will own 74 percent the combined company, which will be public. MetroPCS will also declare a 1-for-2 reverse stock split and pay $1.5 billion in cash to its shareholders. MetroPCS shareholders will retain 26 percent of the company.

A major impetus for the deal was T-Mobile getting access to MetroPCS spectrum, especially its AWS spectrum, to improve its long-term LTE capacity. T-Mobile has said it will be able to deploy 2X20 MHz LTE in 90 percent of the top 25 U.S. markets using MetroPCS' spectrum.

T-Mobile's merger plan involves moving all of MetroPCS' CDMA customers off that network and onto a combined LTE network from MetroPCS and T-Mobile that would run on AWS spectrum. T-Mobile has said it expects all of MetroPCS' customers to be moved onto the new, combined network by 2015 (which T-Mobile has said will be aided by MetroPCS' 60-65 percent handset turnover rate). MetroPCS ended the fourth quarter with 8.88 million total subscribers; it will report first-quarter earnings tomorrow.

The combined T-Mobile and MetroPCS will have 76 MHz of total spectrum in the top 25 major metro areas. The combined company will count 60,000 cell sites and distributed antenna network nodes, resulting in around 765 subscribers per cell site. T-Mobile has said it will consolidate MetroPCS' network in certain areas by decommissioning unneeded sites.

T-Mobile also plans to take MetroPCS' flat-rate brand nationwide following the close of the deal.

For more:
- see this DT release
- see this MetroPCS release
- see this Bloomberg article
- see this Reuters article

Related Articles:
Investors begin rallying around T-Mobile/MetroPCS merger
Deutsche Telekom improves offer in T-Mobile/MetroPCS merger
T-Mobile reverses branded customers losses, posts 3,000 net additions in Q1
DT could delay T-Mobile/MetroPCS vote if initial tally comes in short
T-Mobile kills wireless contracts, will launch iPhone 5 on April 12

Article updated April 24 with additional information.

Correction, April 25, 2013: This article incorrectly stated the number of subscribers MetroPCS had at the end of the fourth quarter of 2012. It was 8.88 million.