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Tag Archives: MetroPCS

Merger Leads to Cell Tower Denial

The merger of T-Mobile and Metro PCS in May of this year has had at least one unforeseen consequence. In the Town of Milton, Mass., Green Mountain Realty applied for a tower in the fall of 2009 to place a MetroPCS antenna at the top (140 feet) and a T-Mobile antenna at 120 feet.

The U.S. District Court of Massachusetts has denied Green Mountain Realty’s appeal of the local rejection of the tower, saying the now-combined carriers only need the lower tower.

“Green Mountain has failed to rule out the feasible alternative of locating a shorter tower at the site,” wrote Rya Zobel, U.S. District Judge. “The record evidence indicates that a 140-foot tower was only required in the fall of 2009 because MetroPCS needed its antenna placed at 140 feet.”  The court added that T-Mobile US has confirmed that its coverage needs could be met with a tower only 117 feet tall.

The judge noted that the evidence supports Green Mountain’s good faith effort to search for solutions to the coverage gap, and he did not let the Town of Milton completely off the hook, leaving the door open for Green Mountain to make the case for “effective prohibition of personal wireless service” if the municipality does not act appropriately.

“Fairly read, the record indicates that both the BOA and the MCC showed some hostility to the idea of any tower at the site,” Judge Zobel wrote. “In particular, there is no evidence that the [local municipality] would not look more favorably on a shorter tower.”

The local municipality must also act in good faith in evaluating the company’s siting efforts or “Green Mountain might well be able to demonstrate that the boards are so fixedly hostile to any new tower that they have effectively prohibited the provision of wireless services in the area,” Judge Zobel said.

T-Mobile Snaps up AWS Spectrum; Reports Merger Progress

T-Mobile US has purchased 10 megahertz of Advanced Wireless Services (AWS) spectrum from U.S. Cellular for $308 million in cash to help in the incremental roll-out of its LTE network coverage to new markets and expands the existing 4G LTE bandwidth in the important Mississippi Valley region.

The spectrum, which covers 32 million pops in 29 markets in the Mississippi Valley region, will allow the rollout of LTE in St. Louis, Mo.; Nashville, Tenn.; Kansas City, Mo.; Memphis; Lexington, Ky.; Little Rock-North Little Rock, Ark.; Birmingham, Ala.; New Orleans; and Louisville, Ky.

John Legere, president and CEO of T-Mobile US, said in a prepared statement, “This is a rare opportunity to secure precious AWS spectrum in key markets that will immediately be put to use by both T-Mobile and MetroPCS customers. This deal expands our network and capacity, allowing for a broader roll-out of 4G LTE and an even faster and more reliable 4G experience for our customers – in addition to spurring competition in the wireless marketplace.”

U.S. Cellular sold its Chicago, St. Louis, central Illinois and three other Midwest markets to Sprint Nextel for $480 million in November 2012, opting to concentrate on markets where it has a higher penetration rate. The deal closed earlier this year.

“Following the market divestiture that closed in May, we have been seeking opportunities to monetize other non-strategic assets,” said Kenneth Meyers, U.S. Cellular president and CEO. “We’re pleased to have achieved significant value for this spectrum license, as we continue to evaluate opportunities to create additional value for our shareholders.” U.S. Cellular was advised on the T-Mobile transaction by Media Venture Partners.

Migration of MetroPCS Customers Ahead of Schedule

T-Mobile US is also seeing the spectrum benefits of its merger with MetroPCS. As customers leave the MetroPCS network, the freed up spectrum is added to the company’s LTE network. Deploying the spectrum on a single network provides a path to double T-Mobile US’ initial LTE deployment to 20 megahertz and 20 megahertz of spectrum in 90 percent of the top 25 metro areas planned for 2014 and beyond.

Just two weeks after becoming one company, T-Mobile US leveraged the compatibility of existing MetroPCS LTE handsets and enabled them to connect to its LTE network in Las Vegas, doubling the LTE spectrum deployment in Las Vegas and increasing data speeds for both T-Mobile and MetroPCS customers with capable devices.

As its LTE network expands to more cities, T-Mobile will continue to migrate MetroPCS customers with LTE-capable handsets and leverage MetroPCS’ spectrum to expand the combined companies’ LTE coverage.

MetroPCS, T-Mobile Announce Cell Site Decommissioning Plans

The bad news that comes with the good news of every carrier merger, decommissioning cell sites, came up as representatives of MetroPCS Communications and T-Mobile USA discussed their strategy to combine their companies at the Morgan Stanley 12th Annual Technology, Media and Telecoms Conference on Nov. 15 in Barcelona.

Neville Ray, chief technology officer of T-Mobile, distanced himself from the “checkered history” of carriers trying to combine disparate technologies, saying that the two companies would not be integrating their GSM and CDMA networks but would come together using LTE as their common technology.

“We are both skating where the puck is going,” Ray said. “The merger transaction is not about integrating two networks. MetroPCS is migrating toward LTE and so is T-Mobile. We will migrate their customers over to our LTE/HSPA+ network as quickly as possible to take advantage of the synergies.”

Migrating the MetroPCS customers over to the T-Mobile network will be completed in two and a half years, he added. As a result, 10,000 of MetroPCS’ 12,500 macrocells will be decommissioned.

“Both companies have built out dense urban core networks. When you look at the overlap of the two networks, there is a lot of it,” Ray said. “That affords us to attack the site decommissioning so aggressively to increase the synergies between the two networks.” Along with keeping 1,500 macrocell sites, the new company will retain MetroPCS’s 6,000 DAS nodes in urban cores, because of their capacity, coverage and efficiency, he added.

J. Braxton Carter, MetroPCS chief financial officer, said the migration of the MetroPCS customers’ 4G LTE handsets over to the T-Mobile network could be achieved with no handset replacement.

“We are doing it leveraging existing T-Mobile and infrastructure, with no need to buy additional spectrum or invest in additional capacity,” Carter said. “4G LTE is a significant development for our company.”

Jim Alling, chief operating officer, T-Mobile, also to part in the panel.

T-Mobile, MetroPCS to Tie the Knot; But Will Sprint Cut In?

It has been a busy couple of weeks for the folks at T-Mobile. Between this week’s announcement of a reverse merger with MetroPCS Communications and last week’s sale of 7,200 towers to Crown Castle International, the carrier has kept bankers, stock analysts on their toes and, apparently, got Sprint Nextel’s attention, as well.

John Legere, T-Mobile’s new president and CEO, said merger with the MetroPCS will help the T-Mobile compete with the big three carriers.

“Together, the combined entity will be able to leverage a faster, stronger and more reliable network to provide amazing 4G services,” Legere writes on his blog. “We’ll have unsurpassed speed and reliability through a denser, higher-capacity network and deeper LTE coverage in key metropolitan areas such as New York, Los Angeles and Dallas. We’ll have greater network coverage and a path to at least 20×20 MHz of LTE in many areas.”

Christopher Larsen, senior research analyst, Piper Jaffray & Co., was a bit more cautious about the immediate benefits of the deal, noting that combining the two companies, from a technology perspective, will take a while. After the closing of the deal, T-Mobile said it will be a separate customer unit of the combined company.

“Because the networks use two different technologies and [the new company] will not combine the networks, synergies will be limited until subscribers are migrated to T-Mobile’s GSM network and PCS towers can be shut down. This is not likely to happen, on a notable scale, until years three and four of the deal,” Larsen writes. “While the combination should improve network quality, especially for PCS subs, we believe it may not be enough to achieve the growth … management expects, as T-Mobile’s network will still likely to be the third or fourth best of the national carriers.”

Jonathan Atkin, analyst, RBC Capital Markets, agreed that the combination of T-Mobile and MetroPCS will not create any operating synergies, because of the difference in technologies, in an Equity Research note written before the merger announcement. Sprint would have been a better partner for MetroPCS because of the technology synergies, he added.

“We assume the MetroPCS’ appeal to Deutsche Telekom lies solely in its spectrum position (3.1B MHz-POPs, mostly in top-20 markets),” Atkin writes. “We believe Sprint (and to a degree, Leap) would benefit competitively [if T-Mobile and MetroPCS merge], due to the significant potential for operational distractions.”

Interestingly enough, the day after the merger announcement, Bloomberg Business News reported a rumor that Sprint Nextel is considering a counter offer for MetroPCS Communications to top Deutsche Telekom AG’s bid to combine it with T-Mobile USA.

“Given the market reaction to the official announcement over the past two trading days, such a bid may make sense for Sprint and MetroPCS shareholders,” Larsen writes. “Sprint investors have indicated disappointment that Sprint was not involved in consolidation, while MetroPCS shares have languished following the disclosure of the details of the reverse merger.”

When T-Mobile USA announced its proposed merger with MetroPCS Communications this week, Crown Castle revealed that T-Mobile and MetroPCS represented, 17 percent and 5 percent, respectively, of its consolidated site rental revenues.

After buying T-Mobile’s towers, Crown Castle now has 1,400 towers that host both carriers. Any decommissioning resulting from the merger would affect towers that represent less than 2 percent of Crown Castle’s consolidated site rental revenues, according to the company. Any economic effect of possible decommissioning on Crown would not be immediate, either. There is an average of approximately ten years and five years of current term remaining on all lease agreements with T-Mobile and MetroPCS, respectively.

Sprint Merger with Leap Wireless or MetroPCS Makes Sense–RBC

RBC Capital Markets has released a report that a merger between Sprint and either Leap Wireless or MetroPCS is not only possible but makes sense. This is not the first time this has come up. In late February of this year, it was widely reported that Sprint’s board rejected a proposal to acquire MetroPCS for $8 billion in an all-stock transaction, because of the dilution to Sprint equity.

The key component that has changed since February is the outperformance of Sprint’s equity versus that of Leap or MetroPCS, which translates into less equity dilution in a stock-based transaction and more attractive EBITDA multiples, according to RBC.

“In light of Sprint shares’ significant outperformance versus Leap and PCS, we believe a bid for Leap or MetroPCS is a distinct possibility,” Jonathan Atkin, RBC analyst, wrote. Additionally, refinancing either the debt of Leap or MetroPCS has decreased by between $50 million and $60 million since February, RBC statistics show.

Either Leap Wireless or MetroPCS would be a good fit, because like Sprint, they are facilities-based wireless operators that use CDMA technology at 1.9 GHz.

“As such, an integration by Sprint of either company would entail minimal technical risk, require no handset migrations, and quite possibly drive top-line ARPU synergies, because of the elimination of a prepaid competitor, and churn improvement due to the elimination of a competitor as well as the likelihood that the acquired customers would find themselves with superior network quality and coverage,” Atkin wrote.

Atkin does not believe a merger would provide any conflicts with Sprint’s ongoing Network Vision project deployment. Additionally, a merger would most likely not receive pushback from federal antitrust regulators. In fact, Atkin noted, no other pairing between carriers makes any sense.

“[A merger of] Sprint/T-Mobile or a different national carrier (AT&T or T-Mobile) purchasing Leap or MetroPCS would be unrealistic given recent statements by company managements, technology incompatibilities and regulatory uncertainties,” Atkin wrote.