Moody's upgrades MetroPCS

Moody's Investors Service said it upgraded MetroPCS Wireless Inc.'s corporate family rating to Ba3 from B1, probability of default rating to Ba3-PD from B1-PD and its senior unsecured rating to Ba3 from B1.

The outlook is stable.

The company's reverse acquisition of T-Mobile USA will proceed as planned after the MetroPCS shareholders approve the transaction, which led to the upgrade, Moody's said.

Deutsche Telekom AG, the owner of T-Mobile USA, will hold 74% of the combined company's shares while MetroPCS shareholders will hold the remaining 26% and receive a cash payment of $1.5 billion, the agency said.

The reverse acquisition gives MetroPCS improved scale, additional spectrum to compete in the U.S. wireless industry and new market potential for its well-regarded service plans in underserved areas, Moody's said.

The upgrade also reflects an expectation for steadily increasing free cash flow generation and a sustained gradual reduction in leverage, the agency said.

These strengths are offset by the combined company's fourth position in the highly competitive U.S. wireless industry, capital intensity associated with building out its 4G LTE network and meeting rapidly rising bandwidth demand and a moderately leveraged balance sheet, Moody's said.

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