MetroPCS Communications Inc (PCS) Investors Express Concerns For T-Mobile Deal

The supporter
Other than Deutsche Telekom, the National Association of Broadcasters (NAB) is also positive about the prospects of the deal. Competition is revving up in the wireless market, and with users’ rising data demand, telecoms’ spectrum assets are being viewed as the industry’s most valuable weapon. T-Mobile admits that its PCS merger would significantly enhance its spectrum holdings — a big help, especially as the carrier continues to upgrade its network.

NAB President Gordon Smith points out that T-Mobile is not the only carrier looking for spectrum acquisitions; lead carrier Verizon also purchased AWS spectrum last year in a $3.9 billion deal from a group of cable companies. Even the second-largest US carrier, AT&T, is hungry for spectrum, and is on an acquisition spree to add to its existing spectrum position. It acquired 2.3 GHz WCS spectrum to facilitate its 4G LTE deployment, and it isn’t satisfied yet.

The carrier plans to buy more airwaves from Verizon in the lower 700 MHz B band. Selling spectrum is part of Verizon’s promise to the regulators when it got its $3.9 billion SpectrumCo deal approved. Kansas-based Sprint, which has agreed to sell 70% stake to Japan-based Softbank, has its eyes on Clearwire. The company already owns more than half of the Bellevue-based carrier, and wishes to acquire the remainder so that it gets total control over its spectrum.

However, Clearwire investors aren’t happy with Sprint’s $2.97-a-share proposal particularly after DISH Network Corp. (NASDAQ:DISH)’s higher offer of $3.30 a share. They consider the deal a gross undervaluation of the company’s most prized asset.

The bottom line
While Clearwire shareholders are dissatisfied, PCS investors are worried about the impact of T-Mobile’s huge debt burden on the joint company. The Richardson carrier had several suitors, including Sprint and Dish, but it spurned those proposals. Though the current bid is being criticized by PCS investors, finding a suitable suitor could be a difficult task for PCS after it dismissed earlier offers. However, Dish could make another attempt on PCS, as chances are high that it would lose Clearwire to Sprint. It would be interesting to see how things move about for both PCS and T-Mobile.

The article Metropcs Investors Express Concerns For T-Mobile Deal originally appeared on Fool.com and is written by Rajesh Marwah.

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