T-Mobile and MetroPCS Will Merge

Two of the smaller telecom companies will join forces to take on the big three: Sprint, AT&T, and Verizon. Find out what’s good and bad about the likely merger.

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Yesterday, the two phone companies announced plans to combine, with MetroPCS taking 26 percent ownership. The name will remain T-Mobile.

Research company NPD Group says this will still leave the merged company as the fourth largest, with 42 million subscribers. (Sprint is third with over 56 million.) But it’s mostly good news for those customers, since their combined wireless spectrum and both companies’ move toward the latest network technology (LTE) is expected to bring better coverage.

Consumer Reports agrees, saying “MetroPCS has distinguished itself, when no other no-contract carrier has done so, by building out its own 4G network in the dozen or so metropolitan areas in which it sells service.”

But the group warns about the downside, too. MetroPCS customers may see a price hike if the merger is approved:

For as little as $40 a month, the carrier offers a plan with unlimited talk and text, plus a very basic 250MB of data. T-Mobile plans can be fairly low-priced compared to the other majors, but the closest monthly plan to the one above (with even less data – 200MB, rather than 250MB) costs $70, $30 more than the MetroPCS plan.

Based on past mergers between carriers, the lesser partner’s pricing is typically subsumed by the major that bought it – which strongly suggests that a combined T-Mobile-MetroPCS will adopt T-Mobile’s pricing.

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