Telecom Lead America: The Federal Communications Commission has approved the merger of T-Mobile USA and MetroPCS Communications, the No. 4 and No. 5 wireless service providers in the U.S.
The Justice Department cleared the merger last week.
However, the final merger will take place after getting the approval from MetroPCS shareholders. The meeting will be held in a month. The FCC applied no significant conditions to its approval, AP reported.
Under the deal, T-Mobile USA’s parent company, Deutsche Telekom of Germany, will hold a 74 percent stake in the combined company, while shareholders of MetroPCS will own the remaining 26 percent stake.
MetroPCS shareholders will also receive a special dividend totaling about $1.5 billion. There are media reports suggesting that getting approval from MetroPCS shareholders will be a tough task for T-Mobile.
For instance, MetroPCS’ largest shareholder, billionaire John Paulson, opposes the deal. He believes it would saddle the company with too much debt, and has said that Deutsche Telekom is getting a better deal than MetroPCS’s shareholders.
On Tuesday, MetroPCS mailed a letter to shareholders defending the deal, saying it’s the best strategic alternative for shareholders and the stake in the combined company is worth substantially more than the standalone company.
Last year, regulators blocked the proposed acquisition of T-Mobile USA by AT&T, the No. 2 wireless company, because it would have reduced competition in the industry.
Last month, MetroPCS Communications said its fourth-quarter net income tumbled 65 percent.
The company earned $32 million for the three months ended December 31 down from $91 million in the same quarter last year.
Revenue of MetroPCS rose 4 percent to $1.28 billion from $1.24 billion, but included a 3 percent drop in service revenue to $1.1 billion.
MetroPCS lost about 93,000 customers during the quarter, compared with the addition of about 197,000 subscribers in the year-ago period. It ended the quarter with 8.9 million subscribers, down 5 percent from the end of the 2011 period.
