T-Mobile and MetroPCS merger confirmed, worth $1.5B [update]

Updated: T-Mobile has officially confirmed the merger, which is worth $1.5 billion. Below, find the original story, as well as a video statement from CEO John Legere.

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Together, T-Mobile and MetroPCS now have 42.5 million subscribers and project $24.8 billion in revenue for 2012.

Original story: Deutsche Telekom is one step closer to acquiring MetroPCS, which it will combine with its ailing U.S. arm, T-Mobile, although the merger may end up being somewhat unusual.

Both Deutsche Telekom’s and MetroPCS’s boards have approved the deal, a source in the know tells the Wall Street Journal. Yesterday, DT admitted that that it was in talks with MetroPCS but made it clear nothing was finalized yet.

The deal could help fourth-place U.S. carrier T-Mobile to strengthen its network and stem the massive tide of subscriber losses. It could also hurt No. 3 carrier Sprint, which is pouring money into upgrading its network to LTE.

As the WSJ tells it, the combined company will still go by the “T-Mobile” name and will be led by T-Mobile chief executive John Legere (who nabbed the role a few weeks ago). The deal will be a reverse merger, the source says, which means MetroPCS will basically eat up T-Mobile and give it a publicly traded stock (bypassing the typical IPO process for private companies). DT will own around 75 percent of the new firm, but since the T-Mobile stock will be public, it could also easily sell it off over time.

According to the WSJ, DT will hold $15 billion of the combined firm’s debt and MetroPCS shareholders will receive $4 per share, or about $1.5 billion in cash.