T-Mobile USA rebrands SunCom markets

T-Mobile USA rebrands SunCom markets
FINAL STEP IN $2.4B ACQUISITION NOW COMPLETE

September 15 2008 - 1:14 pm EDT | Allie Winter | RCR Wireless News

T-Mobile USA Inc. officially took the reigns from SunCom Wireless Holdings Inc.

The nation’s No. 4 carrier launched its branded service in former SunCom markets across North Carolina, South Carolina, Tennessee, Georgia, Puerto Rico and the U.S. Virgin Islands last week. T-Mobile USA announced the acquisition of SunCom for $2.4 billion in cash and assumed debt last September, and the Federal Communications Commission approved the deal in February.

T-Mobile USA said former SunCom customers can keep their current mobile phones and phone numbers, but will have to switch to T-Mobile USA rate plans. In exchange, SunCom customers will now have the opportunity to take advantage of a nationwide network. SunCom retail stores already have been switched over to T-Mobile USA stores. Customers should receive further details of the transition in coming weeks.

Luckily, SunCom customers have some experience in moving between carriers. SunCom was originally an AT&T Wireless Services Inc. network partner that was then switched to Cingular Wireless L.L.C. following AWS’ acquisition by Cingular. That was quickly followed by a spin-off from Cingular after the two could not come to an agreement regarding competing for customers in the same market. The deal also resulted in a large number of market swaps that altered SunCom’s network footprint.

T-Mobile USA said it’s invested more than $100 million in the network inside the Carolinas and Puerto Rico since the acquisition. And aside from boosting T-Mobile USA’s network coverage in the Southeast U.S. and Caribbean, the carrier is set to inherit SunCom’s 1.1 million subscribers. The transition also means T-Mobile USA now serves 99 of the top 100 markets.

In an earlier statement, Rene Obermann, chairman of T-Mobile USA parent company Deutsche Telekom AG, said acquiring SunCom fits perfectly with their plans for market expansion.

“As a result, this acquisition will fit very well with our strategy to grow abroad with mobile primarily within our current footprint within the context of market consolidation,” he said.

Acquiring SunCom might even save T-Mobile USA some money. T-Mobile USA customers have been roaming on SunCom’s GSM/GPRS/EDGE network since 2004. At the close of the deal, T-Mobile USA said it expects to post about $1 billion in savings thanks to reduced roaming costs and operating expenses.

Shortly before T-Mobile USA’s announcement to acquire the company, SunCom was showing signs of trouble. SunCom was also losing money at a rapid rate; from 2006 to 2007 the company’s net loss increased from $110 million to $193 million. A few months earlier SunCom established an agreement with bondholders to exchange notes for 87% of the company’s common stock in an effort to reduce its debt by about $680 million. SunCom was de-listed from the New York Stock Exchange for not meeting exchange requirements and hired a company in early 2007 to begin looking at potential sale options.

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