T-Mobile and MetroPCS announce merger
Jeff Horwich: America's struggling fourth place mobile carrier T-Mobile announced a merger deal today, but not with one of the big guys.
Marketplace's Eve Troeh reports.
Eve Troeh: T-Mobile is joining forces with MetroPCS. Wait, who?
It's a no-contract prepaid phone company, says Carl Howe at the Yankee Group, has about 9 million users.
Carl Howe: Serves a somewhat different customer, typically lower income, but nonetheless it's the fastest growing part of the market today.
T-Mobile gets more customers and coverage. Its parent company, a German firm, gets to unload its American business, something it's long wanted to do, and U.S. communications regulators get a deal they can live with. So, instead of biggest of the big guys -- AT&T or Verizon -- swallowing T-Mobile,
Howe: We're getting a combined carrier that's still a little smaller than number three, Sprint.
So, still, there will be four. That makes a difference for price competition, especially since T-Mobile is known as the cheapest of the four. Howe says T-Mobile's likely to grow by catering to customers who care more about low bills than brand new apps.
I'm Eve Troeh for Marketplace.