The move comes less than a year after US regulators vetoed a planned 39 billion dlr acquisition of T-Mobile USA by AT&T.
Deutsche Telekom, Germany's biggest telecommunications group, has been looking for a way to improve the performance of its US operations, either through the sale of T-Mobile USA or through a merger.
The combination with MetroPCS "enhances Deutsche Telekom's position in the expanding US wireless market," Deutsche Telekom CEO Rene Obermann said in a press release. He said the combined new company will be the "value leader" in wireless telecommunications and will have the scale and financial resources to expand its geographic coverage.
John Legere, CEO of T-Mobile USA, said the merged company will be able to offer better network coverage and speed up the rollout of 4g LTE connectivity. Legere will also be CEO of the merged company.
Telekom said it will receive 74 pc of the shares in MetroPCS, while existing Metro shareholders will retain 26 pc. These shareholders will also receive a one-time payment of 1.5 billion dlrs funded out of Metro's existing cash.
The new company, which will be called T-Mobile USA, will provide mobile communications to about 42.5 million customers in the US. The merger will result in cost savings of between 6 billion and 7 billion dlrs, Telekom said.
The transaction will require approval by US authorities, which the companies expect to receive in the first half of 2013.