Deutsche Telekom Weigh Improved Offer for MetroPCS

Deutsche Telekom AG (DTE.XE, DTEGY) is reviewing a sweeter bid for U.S. wireless carrier MetroPCS Communications Inc. (PCS), people familiar with the matter said. The company is likely to improve the terms and could announce them as early as Wednesday, one of the people said.

The German telecommunications company is trying to save a deal to merge its U.S. unit, T-Mobile USA, with MetroPCS in the face of heavy shareholder opposition over the terms. The new terms would likely include a reduction in the amount of debt that will be transferred to the new company, a change some MetroPCS shareholders have sought, the people said.

Other details of an improved offer couldn't be learned. Senior Deutsche Telekom officials were reviewing the improved offer Wednesday afternoon in Germany, one of the people said.

The German company has previously said that its existing offer was already good enough. Spokesmen for Deutsche Telekom and MetroPCS declined to comment.

The deal currently offers MetroPCS shareholders about $4 a share in cash and a 26% stake in the combined company, which would be freighted with more than $20 billion in debt. Lowering the debt load would increase the value of that equity stake.

MetroPCS shares were trading about 1% higher at $11.31 on Wednesday morning in New York. They have fallen nearly 17% since the deal was announced. The shares jumped ahead of that announcement following news reports a deal was imminent.

MetroPCS shareholders are already voting on the deal in advance of Friday's scheduled shareholder meeting, where it will either be ratified or rejected. Deutsche Telekom has been watching the votes come in as it considers sweetening its offer, and according to one person, the early returns aren't encouraging that the deal will go through on its current terms.

Should a sweeter offer emerge, the meeting could be delayed to give investors a chance to reconsider their votes, the people said.

Some large MetroPCS shareholders have argued for months that the terms of the deal are too stingy. They have been concerned in part by the plan to roll $15 billion of intercompany debt owed to Deutsche Telekom into the new company, saying it could leave it overburdened in the competitive U.S. wireless market.

Opponents of the deal got support last month from proxy advisers Institutional Shareholder Services and Glass Lewis, both of which said shareholders should vote against the merger. Their advice to big investors like mutual funds isn't binding, but it is influential, particularly in close contests.

Deutsche Telekom pursued MetroPCS after an earlier attempt to get out of the U.S. market entirely by selling T-Mobile USA to AT&T Inc. (T) for $39 billion. The Justice Department scuttled that deal on antitrust grounds. Now Deutsche Telekom's strategy is to strengthen T-Mobile through the MetroPCS merger, which would give it new customers and valuable rights to the airwaves. The merged entity's publicly traded stock could give Deutsche Telekom an avenue to sell down its stake in T-Mobile over time.

-- Anton Troianovski, Eyk Henning and Spencer E. Ante contributed to this article.

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