Ina Fried

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As T-Mobile Swallows MetroPCS, It Must Avoid Indigestion

After a couple of bumps, T-Mobile is expected to announce Wednesday that it has finalized its acquisition of MetroPCS.


With the deal done, the company will turn to the task of rapidly integrating the prepaid carrier into its existing business and technology roadmap.

The company has been working on integration plans for months and aims to hit the ground running. CTO Neville Ray promised that the company is well aware of what happened to Sprint when it bought Nextel and is taking pains to avoid that fate.

T-Mobile plans to keep MetroPCS as a separate brand targeting different demographics. That means operating separate stores and maintaining both brands. Plus, T-Mobile has the opportunity to now expand the brand into markets that MetroPCS had missed out on due to a lack of spectrum.

However, T-Mobile hopes to quickly start selling new and renewing MetroPCS customers on a new crop of devices that run on T-Mobile’s spectrum.

“This isn’t about integrating these two networks,” Ray said in an October interview. “It’s about moving MetroPCS over to a bigger and stronger converged network.”

Meanwhile, T-Mobile has made a number of big moves separate from the MetroPCS deal. Last month it announced a plan to scrap phone subsidies, eliminate long-term contracts and, at long last add the iPhone to its lineup.

And the company has spent $4 billion modernizing its network, moving to more widely adopted spectrum and adopting LTE.

In acquiring MetroPCS, T-Mobile parent company Deutsche Telekom also turns T-Mobile USA into a publicly traded company, albeit one still three-quarters owned by the German telecommunications firm. (T-Mobile will trade under the ticker symbol “TMUS” on the New York Stock Exchange.)

That said, one big thing hasn’t changed. T-Mobile remains the No. 4 U.S. carrier and even with MetroPCS, it will significantly trail its top three rivals in all measures of scale.

Update: T-Mobile’s investor relations website has been updated to reflect the combination as having taken place, with its executive leadership team updated to list Thomas Keys as Executive VP and operating chief of the MetroPCS business unit. Meanwhile, MetroPCS’ investor relations page now points to T-Mobile.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik