German telecommunications company Deutsche Telekom is eyeing a deal to merge its T-Mobile subsidiary with rival U.S. carrier MetroPCS.
According to a report Tuesday from The Wall Street Journal, Deutsche Telekom's board members are expected to meet Wednesday to discuss the potential merger, people close to the Germany-based company have said. Should the merger take place, T-Mobile USA and MetroPCS would become a single company, with Deutsche Telekom holding the majority of shares.
Both Deutsche Telekom and MetroPCS have issued statements confirming that talks of a deal are actually in the works.
[Related: T-Mobile USA CEO Resigns]
"MetroPCS today confirmed that it is in discussions with Deutsche Telekom regarding an agreement to combine T-Mobile USA and MetroPCS," the company said in a statement. "There can be no assurances that any transaction will result from these discussions, and the Company does not intend to comment further unless and until an agreement is reached."
The deal could represent a larger effort on Deutsche Telekom's part to reel in more profit with its T-Mobile unit, according to the Journal. T-Mobile is currently the fourth largest carrier in the U.S., struggling to overtake rivals and market leaders Verizon Wireless, AT&T and Sprint Nextel.
But, merger with MetroPCS could potentially grow T-Mobile's subscriber base from the roughly 33.2 million users it has today to 42.5 million users. What's more, it could facilitate T-Mobile's offering of the latest 4G LTE networks, which MetroPCS already rolled out earlier this year.
Even if combined, MetroPCS and T-Mobile would face an uphill battle against market leaders Verizon and AT&T, the Journal noted. Neither company carriers the iPhone, Apple's flagship smartphone that accounts for nearly 17 percent of the U.S. subscriber market, according to industry analysts ComScore.
MetroPCS isn't the first rival carrier to consider a T-Mobile deal. In 2011, AT&T attempted to acquire T-Mobile, but the Federal Communications Commission and Department of Justice blocked the $39 billion deal, arguing it would result in higher prices and less innovation in the marketplace.
PUBLISHED OCT. 2, 2012
