MetroPCS Communications Inc (PCS), Sprint Nextel Corporation (S): These 2 Mobile Networks Will Almost Definitely Merge. Now What?

The proposed merger between MetroPCS Communications Inc (NYSE:PCS) and T-Mobile USA had to wade through acres of red tape before consummation. All the legal and regulatory hurdles have been vaulted, leaving MetroPCS shareholders to issue a final seal of approval.

The seal of approval. You’re very welcome.

It’s still not a completely done deal. MetroPCS’s largest shareholder, hedge fund Paulson & Co., has said that it will vote its 9.9% stake against the current deal structure. On the other hand, second-largest shareholder Madison Dearborn Partners will absolutely support this deal with an 8.3% vote block — one of the the investment firm’s managing directors will have a seat in the new T-Mobile/MetroPCS Communications Inc (NYSE:PCS) boardroom.

I wouldn’t exactly call it a nail-biter. MetroPCS Communications Inc (NYSE:PCS) could use the scale and the deep pockets that T-Mobile brings to the table. Its own cash flows have become dependably positive in recent years, but top-line growth has trailed off. The company needs some kind of catalyst to jump to the next level, and merging into T-Mobile would most definitely be a game-changer. In short, MetroPCS Communications Inc (NYSE:PCS) investors would be silly to turn this deal down.

PCS Revenue TTM data by YCharts

Time to take action
This is no time to rest on your laurels. Sprint Nextel Corporation (NYSE:S) , the other mini-major among the big four, will pose a serious threat as it combines with Japanese sugar daddy Softbank and high-speed network partner Clearwire Corporation (NASDAQ:CLWR) later this year. That three-way combination puts Sprint Nextel Corporation (NYSE:S)’s large subscriber Rolodex together with Softbank’s cash reserves and maverick business ideas, underpinned by Clearwire’s generous spectrum license catalog. This Frankencarrier should scare the snot out of its direct rivals.

SprintBank and T-Metro might even worry Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) . Smaller networks often introduce more innovative and consumer-friendly choices than Ma Bell and Big Red, but they can’t compete with the near-duopoly’s brand awareness and nationwide network builds. Putting pressure on their business models with credible threats from below can only be good for consumers. Investors behind the usurpers will obviously benefit right away, but even AT&T and Verizon should wind up healthier in the long run amid more serious competition.