T-Mobile announces merger; will stay in Bellevue

T-Mobile and MetroPCS announced Wednesday that they have agreed to combine their struggling cellphone businesses in a deal aimed at letting them compete better with their three larger rivals. The Seattle Times reports this could be a good news for the Puget Sound region.

The combined company will use the T-Mobile brand and be headquartered in Bellevue. The partnership results in about 42.5 million subscribers. The merger keeps T-Mobile No. 4 among U.S. wireless companies, but it will get access to more space on the airwaves, a critical factor as cellphone carriers try to expand their capacity for wireless broadband.

T-Mobile’s German owners have been looking to make moves. Last year, T-Mobile USA’s German parent, Deutsche Telekom AG, tried to sell the U.S. cellphone business to AT&T for $39 billion. But regulators rejected that proposed purchase, worried that competition would suffer if the second-largest cellphone company were to gobble up the fourth.

But the regulatory concerns this time appear to be much milder than they had been with AT&T.

“We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment,” Deutsche Telekom CEO Rene Obermann said in a statement.

The Seattle Times reports the merger will likely save T-Mobile $6 or $7 billion. Most of that will come in efficiencies and lower capital costs, but there will be some job losses. T-Mobile currently employs around 4,800 people in the Puget Sound area.

The deal still has to be approved by shareholders of both companies and will require government approval. It is expected to be finalized sometime next year.

The Associated Press contributed to this report.