Deutsche Telekom is nearing a deal to buy MetroPCS and merge it with its T-Mobile USA unit, people briefed on the matter said on Tuesday, as it seeks to bolster its flagging business in the United States.
Talks are ongoing, and a deal may be announced as soon as Wednesday, these people said, cautioning that negotiations may still break down.
If completed, a deal would come nearly a year after T-Mobile's proposed $39 billion sale to AT&T collapsed amid fierce opposition from antitrust regulators. And it would help shore up the Deutsche Telekom subsidiary's position as a lower-cost alternative to Verizon Wireless and AT&T.
Shares in MetroPCS shot up nearly 18 percent on Tuesday, to $13.60, after Bloomberg News reported talks between the two sides. That valued MetroPCS at about $4.9 billion.
Representatives for Deutsche Telekom and MetroPCS declined to comment or were not immediately available for comment.
Deutsche Telekom has been keen for years to find a way to strengthen its American subsidiary, which has lost customers to bigger rivals that offer faster data services and, perhaps more importantly, the iPhone. With 33,168 customers T-Mobile currently trails its bigger competitors, which also include Sprint Nextel, by considerable margins. And it lost 205,000 subscribers in its second quarter this year, quadruple what it reported a year ago.
Adding MetroPCS would give T-Mobile 9.3 million customers, though their phones currently operate on a different network technology.
Based in Richardson, Tex., MetroPCS has long been seen as a target for consolidation within the cellphone service industry. Earlier this year, the company's deal to sell itself to Sprint for stock and cash collapsed after the bigger network operator's board vetoed the proposed transaction.
MetroPCS and another low-cost service provider, Leap Wireless, have considered merging several times over recent years, though those talks bro ke down repeatedly over price.
