The boards of Deutsche Telekom and MetroPCS Communications have approved a deal to merge the prepaid carrier MetroPCS with T-Mobile USA.
The move further consolidates the US wireless industry but also gives T-Mobile USA, the fourth-largest mobile operator in the US more scale to compete with larger operators like AT&T.
Last year, regulators blocked T-Mobile’s US$39bn acquisition by AT&T.
Under the latest deal, MetroPC shareholders will get US$1.5bn in cash and a 26pc stake in the combined company.
The remaining 74pc of the company will be owned by Deutsche Telekom pending regulatory approval from the Federal Communications Commission and the US Department of Justice.
“The T-Mobile and MetroPCS brands are a great strategic fit – both operationally and culturally,” Deutsche Telekom CEO René Obermann explained.
“The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network.
“We are committed to creating a sustainable and financially viable national challenger in the US, and we believe this combination helps us deliver on that commitment,” Obermann said.