PhoneArena has gotten hold of three internal T-Mobile screenshots that show MetroPCS will soon start selling two GSM/HSPA+ phones, the Samsung Galaxy Exhibit and the LG Optimus L9, and that customers will be able to bring unlocked GSM devices such as the iPhone to Metro as well. By virtue of using the global GSM standard, T-Mobile can actually start issuing SIM cards to Metro customers, which is exactly what it appears set to do.

T-Mobile screenshot acquired by PhoneArena

To put this in context, AT&T spent years running two separate network operations — which it called Orange and Blue — after Cingular acquired AT&T Wireless. To be fair, T-Mobile isn’t merging its network with Metro’s. It’s shutting Metro’s CDMA systems down completely, harvesting their spectrum for future T-Mobile’s LTE and HSPA+ networks. T-Mobile, however, plans to maintain the MetroPCS brand for prepaid services, so this move represents more an integration of customer management and billing systems than it does a complete integration of operations.

Still, if PhoneArena’s report proves true, it shows T-Mobile is serious about completing its network overhaul as fast as possible. The faster it gets those MetroPCS customers off of CDMA phones, the sooner it can shut down Metro’s networks.

But there’s a definite benefit for Metro customers as well. They get access to much bigger variety of phones, including devices like the iPhone that were never available to them before. They will have to pay full cost for many of those devices, but since Metro is a prepaid carrier, its customers are already accustomed to paying sticker price. Also, previously every new MetroPCS customer had to buy a new phone when they activated their service. GSM allows them to bring old devices to the network.

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According to a Reuters story this weekend, six institutional investors have protested the $100 billion price tag that Reuters floated last Wednesday. Both of these numbers followed a wack-a-doo rumor from early April that AT&T and Verizon would jointly team up to buy out Vodafone’s 45 percent stake in Verzion in a deal valued at $245 billion. That rumor was reported by the Financial Times’ Alphaville blog. And Verizon denied it.

For those watching at home, it’s possible that you think the media has lost its ever-loving mind, or that somewhere a bored investment banker is sitting back in his ergonomic chair, fingering his Ferragamo tie and cackling with glee. But in general, when these sorts of rumors start hitting the press, it’s part of an aggressive campaign of leaks, where a company (or bank) can float some rumors in hopes of sparking a deal.

Reuters reporters aren’t getting phone calls from Verizon’s board members (although it has happened!); I think they are getting calls from bankers who want to make a deal happen. And it’s a crazy deal with crazy regulatory and possibly tax burdens, but it’s also the right sort of crazy. Verizon and Vodafone’s shared stake in Verizon Wireless has irked both companies for years.

Vodafone needs cash for investments in growing markets and Verizon has been stingy with its dividends. But, as the latest Verizon dividend payment shows, if investors can get Verizon to part with the dollars, Vodafone rewards its shareholders with cash. Meanwhile, Verizon would love to own its network outright if Vodafone would just sell back that stake. But so far Vodafone won’t. Thus, the leaks.

Of course, the two companies have broached the subject of a merger, much like unhappy spouses broach the topic of divorce. But the logistics of the deal — Verizon probably doesn’t want to pay what Vodafone thinks the stake is worth, and each side has shareholders who are, like children, unhappy with a split — have made it too much to think about.

Hence the posturing via blogs and wire services. This is a way of testing the shareholders and perhaps regulators to get a feel for what the deal might entail. This may not come from the companies as a serious play, but rather from bankers who see the fees associated with the deal and understand the lay of the land at both companies. If they can warm up the companies via the media, then they might get a chance at a pretty lucrative deal. That is what bankers get paid to do.

So grab your popcorn, and sit back to enjoy the negotiations between Verizon, Vodafone and whatever financial institution or institutions are selling this sideshow. I suppose it beats wondering how carriers will compensate for the lost of messaging revenue.

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Verizon owns 55 percent of the cellular enterprise, and – according to Reuters’s unnamed sources – it now thinks it can pick up the rest for $100 billion, half of which would come from bank financing and half of which would take the form of Verizon’s own shares. The U.S. firm apparently wants amicable discussions with Vodafone over this, but is willing to “take a bid public” if Voda doesn’t play ball.

I’ve asked Voda for comment on this latest notion, and am interested to see how any potential acceptance of the potential offer would overcome the hurdles faced in the past. The problem there, as another unnamed Vodafone investor previously explained, is that a sale of its share would hit Voda with an enormous capital gains tax bill – which is why a merger seemed more attractive.

As those in the U.K. know all too well, Vodafone is allergic to big tax bills, so let’s see how this latest outbreak of whispering pans out in reality.

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The revised deal would still create a publicly traded company, and DT would still maintain its originally proposed 74 percent ownership. But DT offered to slice $3.8 billion off of the debt the combined company would carry, dropping it to $11.2 billion. DT also said it would drop the interest rate on that debt by half a percentage point and agree to a longer lockup period of 18 months in which DT couldn’t sell it shares.

Metro’s owners wouldn’t get additional stock, nor would their $4.09-per-share buyout increase, but the DT tweaks ultimately would make the equity they do receive more valuable. DT estimates the lower debt level and lower interest rates would add $3 in value to Metro stockholders’ shares.

At first, the T-Metro deal looked like it would sail through the approval process. It encountered no antitrust opposition form the U.S. Department of Justice and the Federal Communications Commission found no regulatory reason to hold it up. The Committee on Foreign Investment in the U.S. raised no national security concerns.

But Metro’s institutional shareholders led by hedge fund Paulson & Co. claimed they were getting a raw deal and tried to recruit other stockholders to its side. DT at first stood its ground, saying the original offer was the best deal shareholders would get. Why did it change its mind? Well, according to Bloomberg, DT got a sneak peak at the absentee proxy ballots as they came in before Friday’s meeting. Apparently it didn’t like what it saw, leading to its decision to delay the vote and sweeten the pot.

Sign image courtesy of Shutterstock user Gary Paul Lewis

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The EU said the merger doesn’t threaten competition. In a press release, the European Commission said of its investigation:

“The Commission assessed the impact of the transaction on the upstream markets for the acquisition of authors’ rights for English language books in the European Economic Area (EEA) and worldwide, and on the downstream markets for the sale of English language books to dealers in the EEA, in particular in the UK and Ireland. The Commission found that on both types of markets the new entity Penguin Random House will continue to face competition from several large and numerous small and medium sized publishers. As regards the sale of English language books, the merged entity will furthermore face a concentrated retail base, such as supermarkets for print books and large online retailers for ebooks, like Amazon. In addition, the Commission’s investigation revealed no evidence that the transaction would lead to risks of coordination among publishers in relation to the acquisition of authors’ rights and the sale of English language books to dealers.”

As I reported last month, Random House and Penguin announced their merger last October and the U.S. Department of Justice approved it in February, followed by Australia and New Zealand. Random House’s parent company Bertelsmann would own 53 percent of the combined company, and Penguin parent company Pearson would hold 47 percent. Random House Penguin’s goal is to enter emerging markets and expand its digital business.

The merger awaits approval by Canada and China.

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That final piece of regulatory approval came from the Committee on Foreign Investment in the United States, which, according to a statement, told the two operators on Wednesday that “there are no unresolved national security concerns with respect to the transaction and that [the committee] has therefore concluded its review”.

The merger has already sailed through other regulatory pitstops, first the Justice Department then the FCC (without the commission even seeing the need to hold a vote). Some institutional MetroPCS shareholders oppose the deal, however, so it’s still not a sure thing – we will see the final outcome after a MetroPCS board meeting on April 12.

If the merger goes ahead, Deutsche Telekom will hold a 74 percent stake in the combined company. It is therefore unsurprising that incoming Deutsche Telekom CEO Timotheus Höttges would become chairman of the board, as MetroPCS revealed on Tuesday.

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So far the T-Metro deal has sailed past regulatory obstacles. The U.S. Department of Justice declined to initiate any antitrust review last week. The deal’s biggest remaining hurdle is a vote by MetroPCS shareholders on April 12. The MetroPCS board has already unanimously approved the deal, but institutional shareholders are opposing it, trying to hold out for a better terms.

The lack of a full commission review and vote is sure to earn the ire of the Communications Workers of America, which anticipated the FCC’s move earlier this week and tried to stop it. The “full Commission has voted on much smaller transactions, including the $72 million Guam Cellular/DoCoMo Guam transaction and the $2.8 billion AT&T/Dobson deal,” CWA said in a statement Monday. “There is no reason that the full Commission should not fully evaluate and assess all the elements of this $30 billion deal.”

Considering the deal would merge the country’s fourth and fifth largest carriers, you’d think the deal with merit the commission’s full attention. But in its declaratory ruling, the FCC’s Wireless Telecommunications Bureau staff said that the benefits of the deal for competition and the public interest were numerous:

… we find that the transaction is not likely to result generally in competitive or other public interest harms. In addition, to the extent there may be some possible competitive harms in selected geographic areas, we find that these possible competitive harms are outweighed by certain public interest benefits likely to result from the proposed transaction. Such benefits include the facilitation of Long Term Evolution (“LTE”) deployment, the expansion of the MetroPCS brand into new geographical markets, the development of a more robust, national network, improved quality of service, and the strengthening of the fourth largest nationwide service provider’s ability to compete in the mobile broadband services market.

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In a statement distributed to financial media, hedge fund manager John Paulson said it would vote its 9.9 percent stake against the merger deal as it stands today. The complex deal would see Deutsche Telekom merge its U.S. arm into MetroPCS, creating a new publicly traded company and paying Metro’s shareholders $1.5 billion in cash. According to Paulson, that just isn’t enough.

According to the Wall Street Journal, Paulson said he would reconsider his position if Deutsche Telekom and MetroPCS could restructure the final company’s debt, lower its interest rate, pay more cash to Metro shareholders or give them a bigger portion of the merged company. Paulson said he believes there are potentially more lucrative deals in the offing, based on interest shown in Metro by Dish Network and Sprint.

Paulson now joins hedge fund P. Schoenfeld in opposing the merger. Together they own about 12 percent of the company, which isn’t enough to derail the deal, but if they can attract other investors to their cause, the Metro board could have a problem on their hands.

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Sprint didn’t reveal their identities, naming the companies W, X, Y and Z, but Company W is most certainly MetroPCS, a carrier Sprint has been dancing around for more than a year. The proxy statement – which Sprint submitted ahead of a shareholder vote on the Softbank deal – said Sprint was in negotiations with Company W between December 2011 and February 2012 over a possible merger, but the talks fizzled out.

That fits in with reports back in February a year ago that Sprint and Metro were on the verge of closing an $8 billion deal, only to have it quashed by the Sprint board. What’s more, Company W frequently pops up throughout the filing as a Sprint acquisition target throughout the rest of 2012, the last reference to a possible deal being in late September. A few days later, T-Mobile and MetroPCS announced their own blockbuster merger plans. Sprint reportedly weighed countering T-Mobile’s bid, but decided against it.

Surmising the identities of the other three companies is a bit more difficult, though a good guess is that Company Z is Dish Network. Between May and September, Sprint was negotiating a potential spectrum partnership with Z, but nothing came of it because Z’s CEO was “focusing on certain regulatory issues.”

At the time, Dish and Sprint had long been rumored to be working out a network share, in which Sprint would host Dish’s new LTE network on its towers. Dish, however, didn’t get approval from the FCC to use its satellite airwaves for 4G until December. By that time Sprint’s relationship with Dish became hostile. Sprint forced Dish to make concessions on how it could use its spectrum, and Dish has been trying to block Sprint’s acquisition of Clearwire.

Companies X and Y remain bigger mysteries. According to the filing, in 2011 Sprint entertained a spectrum-for-equity deal with Company X, while between May and September of 2012, Sprint and Softbank were extensive discussions with company Y over a possible three-way tie-up.

Spectrum policy analyst Tim Farrar speculates that Company Y is T-Mobile USA. If that’s true, Softbank must have been considering quite the blockbuster deal, combining the third-and fourth-largest carriers in the U.S. T-Mobile and Sprint have been the subject of merger rumors in the past, but such a deal would be loaded with complications. Not only would it be a tough sell to the regulators after AT&T-Mo, but the two companies use different 2G and 3G technologies, which would make integrating their operations a nightmare (Sprint is still learning its lessons from Nextel). Farrar said that Softbank probably soon realized that a T-Mobile-Sprint merger was infeasible, which is why it authorized Sprint to pursue Clearwire in December.

As for Company X, Farrar thinks it’s SpectrumCo, the cable-operator venture that sold its airwaves to Verizon last year. The timing makes sense. A few after Company X’s negotiations with Sprint ceased in 2011, the cable operators announced their blockbuster deal with Verizon.

Feature photo courtesy of Shutterstock user Paul Fleet; Sprint photo courtesy of Shutterstock user Susan Law Cain

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Bloomberg, citing unnamed sources, reported that Sprint has no immediate plans to take over the remaining 52 percent of the 4G data carrier it doesn’t already own. The news sent Clearwire’s stock tumbling after several days of riding new highs on news of the Sprint-Softbank deal.

So why the fuss about Clearwire? The company has struggled mightily since its nationwide WiMAX rollout came to an abrupt halt in 2010 while the rest of the mobile industry threw its lot in with LTE. The company has since announced plans to deploy its own variant of LTE, called time-division or TD-LTE. Ostensibly that new network is going up right now, but Clearwire has been known to promise networks that fail to appear.

Clearwire needs both cash and customers to realize its network ambitions, and it might still be holding out hopes that a Softbank deal with Sprint is the key to both. In Softbank Clearwire has found a kindred soul. The carrier is pursuing its own TD-LTE build out in Japan, using the exact same 2.5 GHz band as Clearwire. The two are already partners in a global TD-LTE consortium – along with China Mobile and India’s Bharti – tasked with creating a handset and device ecosystem for their pet technology. A three-way marriage between Clearwire, Sprint and Softbank would only further those goals.

Sprint’s relationship with Clearwire has always been dictated by cash. But with an $8 billion cash infusion from Softbank, Sprint could buy out Clearwire outright and build the fattest LTE pipe in the country with Clearwire’s treasure trove of spectrum. That’s the theory anyway.

The thing is the so-called TD-LTE synergies of such a deal have been overstated. Buying and investing in Clearwire would definitely give TD-LTE a big boost and ensure that the technology had a place in the U.S., but that’s an awfully steep price to pay for what amounts to a vote of confidence. Softbank can build its device ecosystem just as easily by partnering with other carriers. And if the only way of keeping that global TD-LTE dream alive is to purchase struggling international operators, then Softbank may want to reconsider its technology choices.

Customers could roam between Japanese and U.S. TD-LTE networks, but a roaming agreement is hardly the basis for an acquisition. And while there might be device compatibility in TD-LTE, the remaining 2G, 3G and 4G networks and bands Softbank and Sprint-Clearwire use have absolutely nothing in common. It’s not like Sprint handsets are going to work on Softbank’s Japanese networks or vice versa – at least not until voice-over-LTE services are in full swing.

Softbank could feel there are other ways Sprint can use that cash to get the future capacity it needs, either by bidding in future 4G auctions or through other strategic acquisitions. Maybe Clearwire is ultimately part of Softbank’s U.S. ambitions, but it would be a mistake to assume that the two are natural fit just because they’re pursuing the same LTE technology.

Photo courtesy of Shutterstock user Gary Paul Lewis

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