T-Mobile USA to merge with MetroPCS

Deutsche Telekom has confirmed it is to merge its T-Mobile USA unit with the US mobile carrier MetroPCS.

In addition to a $1.5bn (£931m) cash payment to MetroPCS shareholders, the German giant will take a 74% stake in the new firm, which will keep the T-Mobile name.

The merged firm will be the fourth-largest US mobile carrier with 42.5 million subscribers.

MetroPCS shares fell 6%, after surging 18% on Tuesday on news of merger talks.

In December, US telecoms giant AT&T had to end its $39bn (£24bn) bid to buy T-Mobile USA, having run into fierce objections from the government.

'Strategic fit'

"The T-Mobile and MetroPCS brands are a great strategic fit - both operationally and culturally," said Rene Obermann, chief executive of Deutsche Telekom.

"The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network."

If AT&T had bought T-Mobile USA from Deutsche Telekom, it would have become the largest US mobile company.

The US Justice Department moved to block the merger in August 2011, saying it would reduce competition and lead to higher prices.

T-Mobile USA is currently fourth-largest mobile carrier, and has more than 33 million customers.

MetroPCS has grown quickly since its launch in 2002, particularly on the east and west coasts. It was the first to introduce the 4G LTE service in the US.

The combined firm will be about 10 million customers behind the third-biggest firm, Sprint.