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MetroPCS Buyout Speculation Still Awaiting Agreement Decision

October 03, 2012 | About:
When the German Council on Foreign Relations posted a media release yesterday announcing a a merger between MetroPCS (PCS) and Deutsche Telekom (DT), MetroPCS stock shares rose as high as 19.18%.

The announcement was released on DGAP.de (which stands for Deutsche Gesellschaft für Auswärtige Politik e.V.), Germany’s ad hoc disclosure institution that provides news information concerning equity, stocks, share prices and the economy. It confirmed various media reporting the merger, despite the slight chance that the agreement may still fall apart, as seen last year when AT&T dropped plans for its $39 billion buyout of T-Mobile.

A media conference call is scheduled today between Deutsche Telekom, T-Mobile and MetroPCS, at 4:30 p.m. (Central Europe/10:30 a.m. Eastern/7:30 a.m. Pacific), according to a press release T-Mobile released this morning.

As the parent company of the mobile-network operator, T-Mobile USA, Deutsche Telekom is said to acquire control of the company if the merger agreement follows through, consolidating MetroPCS and T-Mobile services that will place its position at a better stance to compete against mobile industry leaders such as AT&T, Verizon Wireless and Sprint Nextel Corp.

Deutsche Telekom is one of the largest integrated telecommunications companies in the world, providing products and services in mobile communications, the Internet, consumer-based Internet Protocol television, and business-and-corporate-based ICT Solutions. The company has about 130 million mobile customers, 33 million fixed-network lines and more than 17 million broadband lines, according to its website.

A merger with MetroPCS falls timely with T-Mobile’s current announcement of entering definitive agreements with Crown Castle International Corp., the largest provider of wireless infrastructure in the United States. The agreement gave Crown Castle rights to 7,200 T-Mobile towers for $2.4 billion at closing, a move that will provide significant growth in the demand for wireless data services, particularly in the most densely populated areas in the U.S.

MetroPCS is known for its prepaid, zero-contract services, and its lower rates for unlimited, 4G data. It is currently selling at $12.86 per share, with a GuruFocus Financial Strength ratio of 4 out of 10, and a Profitability & Growth Rank of 7 out of 10. Additionally, the company has a P/E ratio of 12.8, a P/S ratio of .9, and is currently held by two Gurus: Gotham Capital’s Joel Greenblatt, who currently owns more than 520,000 shares, and Invesco Private Capital’s Wilbur Ross, who owns 100,000 shares.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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