MetroPCS shareholders have given their blessing to the proposed merger of the operator with T-Mobile USA, removing the final obstacle to the deal, which is now expected to close by May 1.
According to a statement from T-Mobile USA (Bellevue, WA, USA) owner Deutsche Telekom (Bonn, Germany), a majority of MetroPCS (Richardson, TX, USA) shareholders voted in favor of the merger on Wednesday.
The transaction will bring together the country’s fourth- and fifth-biggest operators to create a stronger rival to AT&T (Dallas, TX, USA), Verizon Wireless (New York City, NY, USA) and Sprint (Overland Park, KS, USA), the leading three players.
T-Mobile USA owner Deutsche Telekom first announced merger plans in October last year, but its original terms ran into opposition from Paulson & Co. (New York City, NY, USA) and P. Schoenfeld Asset Management (PSAM) (New York City, NY, USA), two MetroPCS shareholders, while proxy advisors Glass Lewis (San Francisco, CA, USA) and ISS (New York City, NY, USA) recommended that other shareholders vote against the deal.
Earlier this month, the German company offered to reduce the debts that would be held by the combined company to $11.2 billion, from $15 billion previously.
It also lowered the interest rates on the shareholder loan and said it would extend its lock-in period, during which it cannot sell shares in the combined company, to 18 months from an original figure of six.
Deutsche Telekom will still control a 74% stake, however, with the remaining 26% going to MetroPCS shareholders, who are also set to receive a cash payment of $1.5 billion.
Paulson & Co. and PSAM had already dropped their complaints about the terms of the arrangement before today’s announcement, while US regulatory authorities have all signed off on the deal.
Besides enlarging T-Mobile USA’s customer base, the merger will also boost its spectrum holdings in a number of important urban markets, enabling it to launch higher-speed 4G LTE services that rival those of AT&T and Verizon Wireless.
T-Mobile USA recently switched on its LTE network in several cities and also began offering Apple’s iPhone 5 under a no-contract pricing plan designed to lure high-value customers away from its bigger rivals.
“This is a major step for Deutsche Telekom,” said Rene Obermann, the chief executive of Deutsche Telekom. “The merger with USA is extremely important, since it enables us to be more aggressive in the USA.”
Timotheus Hoettges, Deutsche Telekom’s chief financial officer – who has already been appointed chairman of the combined US company – said the merger would add “valuable tailwind” to T-Mobile USA’s challenger strategy.
“We have radically changed our business model and launched drastically simplified tariffs,” he said. “Together with MetroPCS, we will make considerable improvements to our competitive position with our combined state-of-the-art network, more powerful sales model and top devices like the Apple iPhone 5 and the Samsung Galaxy S4.”
On the Frankfurt exchange, Deutsche Telekom’s share price rose 1.4%, to €8.97 ($11.65), in the wake of the announcement, compared with its closing price on Tuesday, while MetroPCS’ had slipped by 1.1%, to $11.56, in New York trading.