Will T-Mobile’s MetroPCS Merger Get Stalled?

A proposed merger between wireless service provider MetroPCS Communications Inc.(NYSE:PCS) and T-Mobile USA, a division of Deutsche Telekom AG (DTE.DE), is being opposed by the Paulson & Co investment management firm. As reported by Carew and Damouni at Reuters, Paulson will vote against the current form of the merger on March 28, because the merged entity would have “too much debt at too high an interest rate to be competitive.” The proposed combined company would hold $23.2 billion in debt, according to Bloomberg.

With a 9.9 percent share of stock, Paulson is the largest shareholder of MetroPCS Communications Inc., but it is not alone in its opposition to this proposed merger. P. Schoenfeld Asset Management LP, which currently holds 2.3 percent of MetroPCS stock, is also strongly opposed to the deal. Based on its analysis of the current merger terms, Paulson believes that MetroPCS would have a higher value as an independent company that could continue to pursue an independent-operations strategy.