T-Mobile may acquire MetroPCS is this a good idea?
The number 4 T-Mobile and number 5 MetroPCS mobile carriers in the US are currently in talks about a potential acquisition. Both companies, which have seen struggles in the US market behind Verizon, AT&T, and Sprint may see the potential in combining forces and gaining coverage or market share.
T-Mobile has been heavily advertising its unlimited solutions in hopes of gaining users from the big 3 carriers that have been limiting data usage and raising prices. This has provided a good opportunity for the company, but with changes in technology and the demand for LTE service, the company has been falling behind. T-mobile was left out of the recent iPhone 5 launch and doesn’t have plans to launch LTE until some time in 2013.
The potential for bringing the two companies together may be less based on the technology and more on the customer base. Currently T-Mobile has an estimated 33M subscribers and MetroPCS has an estimated 9M subscribers. If T-Mobile was able to retain the MetroPCS subscribers it would give the company a boost and put it on track to better compete with Sprint.
On top of offering its truly unlimited plans T-Mobile has been seeing success in the BYOD or bring your own device model. This has allowed new subscribers to purchase or utilize equipment rather than subsidizing, as most of the other carriers require. This has provided more choice and has given consumers another reason to consider the company.
The news of the talks saw MetroPCS stock rise by roughly 20% and had financial news buzzing, calling it a “hot stock” to watch. Overall an acquisition looks like a positive opportunity for T-Mobile. The carrier can infuse subscribers and expand its market. The only downside would be if the company was unable to retain the MetroPCS customers, though it is unlikely to see a mass exodus considering the amount of acquisitions that have occurred in the Telecom space.