T-Mobile May Merge with Metro PCS

T-Mobile and MetroPCS might become one company if T-Mobile parent company Deutsche Telekom has its way.

According to All Things D Deutsche Telekom confirmed that it is in talks to acquire MetroPCS earlier today. The German company would combine MetroPCS with its flailing T-Mobile USA subsidiary to create a larger company. Deutsche Telekom would control the majority of shares in the newly formed company should the deal go through.

Neither company has signed a deal just yet, but Deutsche Telekom’s board should discuss the matter sometime soon. In the meantime talks might continue between the two companies.

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The last time T-Mobile faced a merger it was with AT&T, though that was eventually shot down by the U.S. government. That merger involved AT&T buying most of T-Mobile’s shares from Deutsche Telekom and assimilating the fourth-place carrier into the largest GSM network in the U.S.

While the AT&T and T-Mobile deal made sense from a network perspective (both carriers use GSM networks), the MetroPCS seems a bit strange. MetroPCS uses a CDMA network like Sprint and Verizon Wireless, which isn’t compatible with the GSM network of T-Mobile.

A lot of work would go into combining the two companies’ networks. The new company will need to choose one network to use and either make phones that use both or slowly shift users to on over a course of a few years.

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Spint made a similar move of combining two networks when it acquired iDEN network Nextel in 2005. The carrier still hasn’t recovered, and it won’t get rid of the iDEN network until sometime in 2014.

Hopefully Deutsche Telekom has a plan to help T-Mobile avoid the mistakes Sprint made.

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