MetroPCS’s stock has dropped significantly since the merger was announced, although that could also be because their 2012 fourth quarter net profit plunged by 65% because of higher expenses combined with lost subscribers. Earlier in 2012, Sprint had tried to buy MetroPCS for $8 billion but their board rejected the plan. MetroPCS has argued the deal with T-Mobile is the best of competing alternatives and is urging its shareholders to approve the merger.
MetroPCS smart phone users will be able to connect to T-Mobile’s LTE networks and vice versa. The two companies will continue to operate two different LTE networks in 2013, but combine the networks in 2014. MetroPCS will be phasing out all its old CDMA networks in favor of LTE networks by 2015. Recently MetorPCS announced a collaboration with Ericsson to upgrade its LTE network hoping to attract new subscribers.
The Trade: Buying the PCS April 11 Calls for $.41
Risk: $41 per 1 lot
Reward: Unlimited
Breakeven: $11.41
Greeks of the Trade:
Delta: Long
Gamma: Long
Vega: Long
Theta: Short
—
Andrew Keene
President/Founder
Andrew@KeeneOnTheMarket.com