The Federal Communications Commission on Tuesday approved the merger of T-Mobile USA with MetroPCS, a deal that would create a stronger rival to wireless giants Verizon Wireless and AT&T.
The $1.5 billion deal still must be approved by the Committee on Foreign Investment in the United States because of T-Mobile’s foreign owner, Germany’s Deutsche Telekom. But the merger is widely expected to be blessed as U.S. officials push for greater competition in the $178 billion wireless market.
The merger would combine the nation’s fourth- and fifth-largest wireless carriers with a combined 42.5 million subscribers. Under terms of the deal, Deutsche Telekom will pay Metro PCS $1.5 billion in cash for a 74 percent stake in the firm, whose pre-paid phones have become popular among urban and low- income customers.
The firms argued to regulators that together they would combine their wireless airwaves to create more robust networks that reach more Americans.
The FCC agreed, saying in a release that the merger would help expand broadband services to U.S. consumers, create more choices among wireless carriers, and increase investments in telecom networks.
“Today’s action will benefit millions of American consumers and help the U.S maintain the global leadership in mobile it has regained in recent years,” FCC Chairman Julius Genachowski said in a statement.”
Genachowski has credited the FCC’s and DOJ’s decisions to reject T-Mobile’s previous attempt to merge with AT&T as good for competition. That would have made the nation’s second-largest provider too strong, Genachowski and Justice officials argued. They instead wanted to enable smaller rivals to challenge the dominance of Verizon Wireless and AT&T, which have about six out of 10 mobile device subscriptions.
Competition in the wireless industry has become a major issue, pushed largely by consumer advocacy groups who say mobile device users are saddled with ever-increasing wireless bills.
The FCC will design an auction for more wireless airwaves next year and some public interest advocates have called for limits on how much spectrum Verizon Wireless and AT&T should be able to purchase.
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