T-Mobile is joining with MetroPCS to improve both company’s market share and customer offerings. Though they both are still profitable companies, they have been struggling. They are both losing customers and are behind other companies on technology.
The new company will retain the T-Mobile name and will have 42.5 million customers with the majority coming from the current T-Mobile. Annual sales coming in will be almost $25 billion to make it easier to update and expand with a savings of $1.5 billion. The idea is that combining the resources and assets of the two companies will better enable them to compete with the other networks.
The plan is to keep the two companies separate right now since the technologies will not work across the networks. However, there are plans to add a 4G-LTE network that will work with both networks and upgrade all customers to that network. This will be a slow, lengthy process that will take until 2015 to complete for MetroPCS customers.
The new company will still be based in Bellevue, Washington where the current T-Mobile is located with an additional office in Dallas, MetroPCS headquarters. The boards of both companies have approved the deal.
Even though the merger is between the fourth and sixth largest network carriers, it will not move them up in the list since they will still be behind Sprint, who is currently at third place in sales and number of subscribers.
This is not the first time that T-Mobile has been involved in a change. In 2011, the company accepted a deal from AT&T for a buyout, but it was ended by U.S. regulators. T-Mobile is hoping to see an improved self-sufficiency that will allow them to compete with the bigger companies. The question remains if they can find a way into the top three.
[Image via finance.blogrange]