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Following yesterday's news that T-Mobile USA and MetroPCS would be officially commencing a reverse takeover (where the smaller company takes over the larger), we're hearing today that the deal may be getting even more interesting. Sprint, which had plans to buy MetroPCS previously, may be considering offering a higher amount for the company than what is currently agreed upon between T-Mobile and MetroPCS.

If you'll recall back to Sprint's first attempt to buy out MetroPCS for $8 billion, CEO Dan Hesse was reportedly hours away from closing the deal when it was overturned by the board of directors. Now that the threat of a combined T-Mobile / MetroPCS is all too real, Sprint may be more motivated to keep these two apart this time around.

Source: BusinessWeek


Reader comments

Sprint may be considering counter offer for MetroPCS


Just to clarify...

This isn't a reverse takeover.

It's a merger of disproportionately sized competing companies.

A reverse takeover is when a private company "takes-over" a public company and thus becoming public without a "real" IPO...

My Sprint contract is up next year, and I was excited about the possibilities of the T-Mobile/MetroPCS merger as improving my mobile life and making it cost less, and I don't want Sprint to stick its nose in and mess things up. I realize it's not all about me. It was the emotion of the moment.

This is why its called a reverse take over. Metro PCS is trying to take over T-Mobile. T-Mobile is larger than Metro PCS, which is why its called a reverse take over.

Would make more sense wouldn't it? MetroPCS uses CDMA which seems like it would be easier to integrate rather than completely switch out the equipment.

Not really. It's been reported that MetroPCS is looking to dump their CDMA and go LTE. So if it's already going that route, the network isn't a deciding factor.

And I don't think Sprint's and MetroPCS's bands are complementary, so it's not a big gain in that department. [By complementary, with T-Mo's bands combined with MetroPCS's bands, they can get to a 20x20 LTE network: 20Mhz uploadx20MHz download, which the experts say is substantial capacity].

I think the T-Mo/MetroPCS actually makes better sense. Sprint buying MetroPCS is just to gain a handful of subscribers and a small block of frequencies. (Oh, and to keep T-Mo from having it)

The deal is already made period. Why would metropcs now pay Tmobile and it's parent company to back out of the deal then turn around and agree with Sprint?? It makes no common sense whatsoever. Sprint had it's chance to purchase metropcs and the board told Sprint no. So basically what Sprint needs to do now is buzz off. Tmobile and overall network pimp slaps Sprint silly.

Undeadnexus hit upon your comment about parent company above, so I'll take the rest I suppose.

Regarding why they'd (metro) do this; were talking numbers in the multiple billions, a breakup fee from metro of $150 mil is truly a drop in the bucket. Any bid from Sprint that's higher than $8.15 B actually puts more money in the pocket of share holders. Additionally if the share holders/board are at all concerned with EUE during a transition, selling to a CDMA carrier would be a better plan than selling to a GSM carrier.

Hope that clarifies.

It's not that simple. Even if we assume the break-up fee is infinitesimal compared to the total size of the deal, Sprint opens itself up to a tortious interference claim from T-Mobile. This obviously depends on the language of the contract and the expectations of the parties, but, that said, the threat of a multi-billion lawsuit is enough to deter most companies from interfering with a publicly announced, and board approved, merger.

Regarding the breakup fee, no assumption is necessary. It's been made public knowledge that metros fee is 150mil, T-Mo's is 250mil. Regarding the rest, Richards concerns were stating it makes no sense for Metro to pay the fee to accept a larger bid from Sprint. I stand behind my comments which were spoken from the perspective of why metro would want to do that. Sprint may or may not have other issues to contend with from a legal perspective, but I am not a lawyer and terms like "tortious interference" make me change the channel lol

Richy boy, the deal is not finalized you idiot. Hey, weren't you a Sprint worshiper at one point? Yeah exactly.

I guess you missed "Sprint ...may be considering offering a higher amount for the company than what is currently agreed upon between T-Mobile and MetroPCS". THAT is why MetroPCS would likely back out of their current deal and go with Sprint, depending upon how much sweeter Sprint makes the deal. Do YOU ever think? Do YOU have any common sense?

T-Mobile should go ahead with the deal to acquire MetroPCS.

On top of that, Sprint should buy or merge with the combined T-Mobile/MetroPCS.

Networks incompatible? Sprint is no stranger to this.

They can just call the new company SMETMO.

The deal was not for T-MO to acquire Metro. It was a merger...big difference. In this case, Metro would be the company, but operate under the T-MO name. Basically, D Tel spinning off T-MO USA.

Doesn't Sprint have enough on its plate with the snails-pace LTE rollout, the Network Vision upgrades for its beleaguered 3G service and all the overhead from adding on the iPhone?

I hope Hesse has a nice golden parachute, because at some point he's probably gonna get his walking papers from the BoD.

This would actually be a step forward for Sprint's Network Vision if they were to PURCHASE MetroPCS, it would boost subscriber numbers, increase spectrum for LTE rollout, and provide an established network for areas Sprint is clearly lacking in, e.i. Florida, parts of New York and Michigan, etc.

Am I the only one here who would be happy to see Sprint buy MetroPCS? As a Sprint user, I'd be happy to see the network get a bit larger. I was one of the people hoping that Sprint would manage to put together enough money to buy T-Mobile although that would shrink the number of nationwide providers from 4 to 3 and therefore be bad for competition. Honestly, as long as Metro gets purchased by Sprint or merges with T-Mobile, keeping the more well known name, both are better than a Verizon or AT&T purchase of one of those.

I don't think MetroPCS operates anywhere Sprint doesn't already have coverage. I wouldn't expect a Sprint/Metro play to make any difference to Sprint.

I do concur that Verizon and AT&T should stay out of this picture. But I think the T-Mo/Metro merger is the more logical path. But money & logic don't always agree! LOL

I will join you in the happiness of this possibility, I frequent areas that have Sprint and Metro, but the signal for Sprint is terrible for those areas, whereas Metro is strong, it'd be great to have good description in those areas.

From yesterday's article:

"T-Mobile this morning announced that it's merging with MetroPCS in a $1.5 billion deal. The two companies will unite under the T-Mobile name, with current TMo parent company Deutsche Telekom to keep a 74 percent stake. The rest goes to MetroPCS shareholders, who also get the cash"

So how is this a reverse takeover? DT will own 3/4 of the new entity which in any book is the controlling interest. Am I missing something?

I thought that sprint already owned metropcs, doesn't metro use sprints network? Maybe I am just completely wrong..

I dont care who sprint buys or doesnt buy. What I do care about is not having LTE in my area. I'm gonna give them 2 more months. If I dont see faster speeds than .17kbps I'm selling my GS3 on craigslist and going to verizon or AT&T.

I'm not giving them that long. If speeds haven't improved by the time the Note 2 hits the Verizon shelf, I'm gone.

This deal makes more sense, since both Sprint and Metro are CDMA carriers. A lot of people take bad ESN sprint phones, and put them on Metro. Plus, Sprint would get extra LTE coverage, which they really need. Granted, Metro's LTE network has nowhere the speed the big players have, but that doesn't mean the network can't be upgraded.

Even with Metro looking to do everything over LTE, it's going to take time to get everyone off the CDMA network. T-Mobile would need to make a decision about when to "cut off" the CDMA signal, and go to GSM/LTE. With Sprint, this would not be as much of an issue.

Either way, I want T-Mobile to succeed here in the US, as I don't want to see AT&T as the only GSM carrier in the US.