MetroPCS To Save AT&T/T-Mobile Merger?

With AT&Ts $39 billion pending acquisition of T-Mobile USA mired in antitrust litigation, an unlikely party could save the merger: a competitor.

Dallas-based MetroPCS Communications has emerged as a frontrunner to acquire assets from AT&T and T-Mobile and such assets would likely include subscribers and wireless spectrum, Bloomberg reported, citing people familiar with the matter.

Such a deal could assuage concerns at the U.S. Department of Justice that the merger between AT&T and T-Mobile will significantly harm competition in the wireless market. Otherwise, AT&T must head to trial over an antirust lawsuit the DOJ filed over the summer to block the merger.

With 9.1 million subscribers based on second-quarter results, MetroPCS has relatively strong financials. The company reported a second-quarter profit of $84 million, the highest adjusted EBITDA ($357 million) in its history and had on hand nearly $1.86 billion in cash and cash equivalents as of June 30, 2011.

Federal Communications Commission electronic records show that MetroPCS vice chairman, secretary and general counsel, Mark Stachiw, and outside attorneys met with FCC officials earlier this month to discuss the status of the agencys review of the AT&T/T-Mobile deal. During the meeting, MetroPCS expressed its belief that that an FCC order setting the merger process for a hearing before an administrative law judge would be premature for a variety of reasons, according to a letter dated Oct. 17.

The merger between AT&T and T-Mobile USA would knock out the fourth-largest U.S. wireless provider and make AT&T the biggest provider of mobile services, surpassing Verizon Wireless (107.7 million total connections based on third-quarter results) and extending its lead over Sprint Nextel. Based on third-quarter results announced Thursday, AT&T currently serves 100.7 million customers, including 68.6 million postpaid subscribers.

T-Mobile USA (33.6 million customers based on second-quarter results), which is owned by Germany-based Deutsche Telecom, has been struggling with subscriber losses and AT&T has dismissed the company as a serious competitor. But critics including the Justice Department contend the deal will significantly reduce consumer choice and result in higher prices for Americans.

Several entities besides the DOJ have sued AT&T over the deal, including Cellular South, Sprint and seven states attorneys general.

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