UPDATE 1-T-Mobile USA, MetroPCS in talks over deal-sources
(Adds detail, background)
By Edward Taylor and Nadia Damouni FRANKFURT/NEW YORK, Oct 2 (Reuters) - Deutsche Telekom
is in advanced talks to combine its T-Mobile USA unitwith MetroPCS , three sources familiar with the situationsaid on Tuesday, as the German telecoms group seeks to stem adecline in customers at its U.S. business.
"A deal is close," one source said, while another personsaid an announcement could follow later on Tuesday. A thirdperson said a press conference was prepared for Wednesday.
Deutsche Telekom declined to comment, while MetroPCS was notimmediately available for comment.
MetroPCS shares traded 21 percent higher at 1526 GMT.
Deutsche Telekom tried to sell its U.S. business T-MobileUSA, once a strong growth engine, to AT&T for $39 billionbut fierce regulatory opposition scuppered the deal, leaving theGerman company with a $6 billion breakup package.
Ever since the AT&T deal collapsed, Deutsche Telekom hasbeen looking for a solution for the unit which has to competewith much bigger rivals Verizon Wireless , AT&T Inc andSprint Nextel .
In the second-quarter T-Mobile USA lost 205,000 customers inthe United States and is expected to feel the pressure from thelaunch of the new iPhone, which it will not be selling in theU.S.
Speculation that T-Mobile USA and MetroPCS were consideringa merger have come up in the past although analysts have pointedout that the two companies run on different technologies.
MetroPCS as well as rival Leap Wireless caters tocost-conscious customers but has been feeling the heat as biggerrivals such as Sprint enter their low-cost phone markets.
Shares in Sprint fell 5.4 percent upon news of the possibletie-up between its rivals.
(Additional reporting by Arno Schuetze in Frankfurt, NicolaLeske in New York and Leila Abboud in Brussels; Editing byElaine Hardcastle)
(harro.tenwolde@thomsonreuters.com; +49 69 7565 1271; ReutersMessaging: harro.tenwolde.thomsonreuters.com@reuters.net)
Keywords: DEUTSCHETELEKOM TMOBILE/