Deutsche Telekom Is Said to Review Improving MetroPCS Terms

Deutsche Telekom AG (DTE) is reviewing improved terms for a deal to merge its T-Mobile USA unit with MetroPCS Communications Inc. (PCS) to secure approval from shareholders, according to two people familiar with the matter.

Deutsche Telekom is considering amending the terms ahead of a MetroPCS shareholders meeting scheduled for April 12, said the people, asking not to be identified because the discussions are private. Deutsche Telekom’s supervisory board held a meeting at its headquarters in Bonn today, another person said.

MetroPCS rose 3.3 percent to $11.56 in New York after news of the discussions surfaced. Deutsche Telekom and MetroPCS are combining the fourth- and fifth-largest U.S. wireless carriers to gain the scale to compete against market leaders AT&T Inc. and Verizon Wireless. The transaction faces opposition from some of MetroPCS’s largest shareholders and investor advisory firms, which are concerned that the new company will be loaded up with too much debt.

Deutsche Telekom agreed in October to the merger, which gives MetroPCS investors $1.5 billion of cash and a 26 percent stake in a new entity that’s taking on $15 billion of debt from Deutsche Telekom.

Any revision to the terms would require a new date for a shareholder meeting, which may take place in about two weeks, because the U.S. Securities and Exchange Commission would require the filing of a new proxy statement, other people familiar with the matter said yesterday.

Photographer: Ralph Orlowski/Bloomberg

A pedestrian walks past a Deutsche Telekom AG logo at the company's offices in Darmstadt, Germany. Close

A pedestrian walks past a Deutsche Telekom AG logo at the company's offices in Darmstadt, Germany.

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Photographer: Ralph Orlowski/Bloomberg

A pedestrian walks past a Deutsche Telekom AG logo at the company's offices in Darmstadt, Germany.

AT&T Fallout

Deutsche Telekom is seeking to avoid another failed attempt to revive T-Mobile’s prospects, like the aborted takeover of the unit by AT&T Inc. in 2011. For Deutsche Telekom Chief Executive Officer Rene Obermann, the MetroPCS deal would be the largest acquisition since the German company entered the U.S. market more than a decade ago.

Deutsche Telekom rose 2 percent to close at 8.61 euros on the Frankfurt exchange today.

Dow Jones Newswires reported the discussions over an improved offer today.

T-Mobile is struggling with contract-subscriber losses and has fallen behind rivals in embracing long-term evolution, or LTE, a faster network technology. Part of CEO John Legere’s strategy is to offer services, including LTE, at lower prices than its rivals.

On April 12, T-Mobile will begin offering Apple Inc. (AAPL)’s iPhone for the first time, becoming the last major U.S. carrier to get the device.

The combination of T-Mobile and MetroPCS would create a company with 42.3 million customers. The deal moved a step closer to completion on March 12, when both the Federal Communications Commission and the Justice Department approved the combination. The following week, the Committee on Foreign Investment in the U.S. approved the deal.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net

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