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Summary:

T-Mobile USA and MetroPCS aren’t jinxing themselves by blurting it out loud, but when of the benefits to their merger is much compatibility with the iPhone 5. The combination of Metro’s LTE network and T-Mo’s new HSPA+ network is a match made in Apple heaven.

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One of the unstated benefits of T-Mobile’s proposed merger with MetroPCS is one that T-Mo’s customers have been clamoring over for years: the iPhone. T-Mobile is already on a technology trajectory that will make its network compatible with the iPhone 5’s fickle radios. But tying up with MetroPCS will get T-Mobile there a lot faster.

The iPhone 5 requires T-Mobile to support two common frequency configurations: 3G in the 1900 MHz PCS band and LTE in the 1700 MHz/2100 MHz Advanced Wireless Service (AWS) band. T-Mobile has neither today, but it will meet the first requirement shortly as it completes the relocation of its HSPA+ network this and early next year. As for LTE, T-Mobile won’t have a commercial network ready until the second half of 2013 and even then it won’t have a sizable LTE footprint until 2014. That’s where MetroPCS comes in.

MetroPCS has a live LTE network in 14 cities, and for the most part it’s running on the same AWS frequencies already supported in the AT&T/Canadian variant of the iPhone 5. T-Mobile CEO John Legere said on Wednesday that as soon as the merger closes, as expected in the first half of 2012 2013, the combined carrier will have dual-mode devices supporting T-Mo’s HSPA network and Metro’s LTE network ready to go. One of those devices might just be the iPhone 5.

Of course, T-Mobile and MetroPCS aren’t saying any of this out loud. It’s best not to test the Apple gods, and there’s certainly no guarantee that the companies will be able to strike an immediate distribution deal with Cupertino. But T-Mobile is already servicing more than a million iPhones on its 2G network and will ramp up its efforts to lure in even more unlocked iPhone owners as soon as it can fully support the device’s 3G capabilities.

T-Mobile may have to continue that bring-your-own-iPhone strategy for another year, but if all goes according to plan, by next spring it will have a fully Apple-compatible network in some of the country’s biggest markets, including New York City, San Francisco, Philadelphia, Las Vegas, Dallas and Boston. There are still a lot of obstacles T-Mobile and MetroPCS need to overcome to make this merger work, but at least the iPhone won’t be one of them.

  1. Well the question is how fast (and they need to offer the iPhone sooner than ASAP…before yesterday) can they sell the iPhone? And will it fast enough to stem this quarter and next quarter mass consumer exodus?

    Remember 500,000-600,000 consumers have been leaving T-Mobile EVERY SINGLE QUARTER… Is offering the iPhone in 1-2 years fast enough??? I doubt it.

    They need it within the next few quarters.

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  2. “T-Mobile CEO John Legere said on Wednesday that as soon as the merger closes, as expected in the first half of 2012…”

    It’s a little late for that, isn’t it? ;)

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    1. Oops, good catch Anon. Will fix. Thanks for pointing out.

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  3. Kevin I think they need to work out a deal with Apple soon! And announce that they will carry the iPhone in the next few quarters (2-3? or 1 year)… Waiting an additional 1-2 years to even say that they will have the iPhone – in my opinion – is not soon enough.

    They are in really serious trouble.. loosing almost 600,000 subscribers each quarter -and many more in the future because of the transition will take a massive financial toll on the companies revenues. Can they continue to service their now even higher debt load? Will projecting future revenues and profits significantly lower?

    They need to stem the massive bleeding… An announcement before the actual sale of the iPhone may be a good temporary patch.

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    1. Hey College,

      I’m sure they’ll announce the moment they broker such a deal. But you’re right. They longer they wait the more damage is done.

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  4. This T-Mobile/MetroPCS would focus on the prepaid, lower margin market. For T-Mobile/MetroPCS, to pay Apple high margins for the iPhone would be a disaster.

    A reason that Sprint couldn’t buy MetroPCS is that Sprint’s iPhone fiasco isn’t helping that carrier’s financial problems.

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    1. Yeah Dan, I would agree. But then again Cricket has taken the Leap (Get it? I’ll be here all week, ladies and gentlemen). Also I think there is big business in older iPhone models, which Metro could sell cheap even unsubsidized as well as unlocked devices.

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    2. From the business/financial view (irregardless of opinion and preference)… Sprint was in the same predicament only worse… they were losing hand over first massive number of consumers every quarter from both Nextel network and from Sprint. Sprint consumers were leaving for AT&T and Verizon because the iPhone.

      Financially, Sprint is in a better (though still in very bad trouble) position now after stemming the loss on the Sprint side and actually bringing in new high paying customers. Now they’re able to keep servicing their massive amount of debt, while also servicing Clearwire.

      If wasn’t for the deal that the CEO made to pony up and pay Apple billions for the iPhone, Sprint would have clearly declared bankruptcy quarters ago.

      Remember, Sprint is hemorrhaging money and customers from previous partnerships and acquisitions: Nextel and Clearwire. They were also losing hundreds of thousands of consumers on its Sprint network until very recently after having the iPhone with an attractive service offer (unlimited).

      So I’m not seeing how it was a disaster (putting aside opinions)?

      Financially, the question asking “was the iPhone was good or bad for Sprint?” – is the wrong one.
      It was good and that deal is the only thing that’s keeping the company afloat.

      The question going forward to ask for Sprint is… will the iPhone deal provide enough benefits and financial strength in revenue to offset the continual loss from Nextel and Clearwire?

      That’s the question.

      Keep bias and opinion out of this… this is business. For whatever reason (for better or for worse) the reason that consumers were (and are) leaving in the hundreds of thousands to other carriers is because of the iPhone.

      Remember before Sprint signed the iPhone deal, Sprint was losing customers that dumped cheap unlimited data for more expensive and capped data at AT&T and Verizon…why? iPhone.

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    3. There’s a growing market for lower cost pre-paid plans tied to Bring Your Own Phone (BYOP). T-Mo is the one US MNO who seems interested in this market, the MVNOs being StraightTalk and Ting. Some folks who can do the math realize that they can buy an unlocked iPhone or Galaxy S III and still come out ahead over a 2 yr service period. We need to stop associating prepaid with low end handsets and customers.

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    4. Customers pay Apple’s margins (as part of the device price) – not carriers. The carriers simply make a credit deal to let you stretch out your payments. It’s like saying the dealers pay GM’s profit margin when you buy a car with an auto loan. With the reduced churn and higher service fee payments the iPhone delivers, none of the carriers are losing money on Apple, they’re just encountering near-term cash flow problems associated with effectively loaning their new customers money to buy equipment.

      T-Mobile may not be able to afford the same level of subsidy as Verizon and AT&T with their lower plan rates, but they most definitely cannot survive in current market conditions for much longer without offering it.

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  5. I don’t know why tech annalist are so in love with the iPhone? The reason why carriers wanted the iPhone was because it convinced dumb phone subscribers to pay for smartphone data plans. T-mobile already has a lot of smartphone subscribers so they would really gain nothing from this.

    The subsidy for an iPhone is probably too much for t-metro to afford.

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    1. Cell phone carriers are “so in love with the iPhone” because of the subscriber metrics it delivers. The “carriers can’t afford it” meme is ridiculous –– it’s a huge cash cow for them, subject to the initial buy-in costs associated with paying the subsidy. But they are effectively buying very lucrative cash cows.

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      1. Exactly what Jason doesn’t understand is that big boys in the executive don’t care about personal opinions and biases…. They just follow the money.

        Look at Sprint… the Sprint PCs business was loosing hundreds of thousands of subscribers every quarter. Now Sprint PCS is adding hundred thousand NEW subscribers. And these are high paying long term guaranteed subscribers.

        Outcome: stock up over 122% in one year.

        Bottom line: who cares if it’s an iPhone? if that’s what everyone wants you would be stupid not to offer it. (T-Mobile, are you listening??)

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  6. Would rather see a Lumia 920 from the partnership.

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  7. EOY can’t come soon enough. As soon as they get their 3G 1900Mhz spectrum up, I’m paying my family’s AT&T ETF and moving their iPhones. Get moving T-Mobile!

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  8. Richard Bennett Thursday, October 4, 2012

    Good insight, Kevin, this is exactly what I told the Capitol Hill reporters yesterday.

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  9. Kevin Fitchard Thursday, October 4, 2012

    Thanks Richard

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    1. Kevin I really do hope that you write an article spelling out what T-Mobile needs to do… And with proper research realize that T-Mobile NEEDS to Sprint. Sprint is not a failure (yes there were false starts – clearwire) but their management and strategy will turn out to be correct. Their stock is up over 122% this year.

      T-Mobile needs to follow what Sprint did: shutdown incompatible network, offer the iPhone ASAP, offer a distinct competitive advantage to coincide the iPhone, build out a uniform LTE network.

      Remember, Sprint had the same problem with hundreds of thousands of subscribers leaving every quarter.

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