Comments on article found at: online.wsj.com/article/SB10001424052748703525704575061390204655782.html

For the last 3 years I have advocated the merging of MetroPCS and Leap – check my past GLG postings. All I can say is finally.

It is not a matter of “if” but a matter of “when”. I feel vindicated. Neither company can survive without a merger. In short the merger must begin this year and complete as quickly as possible. Although the combined company would still be dwarfed by the remaining Big 3, the reality is that the combined serves an important segment of the telecom market.

This merger is not about long term survival of a new entity but an exit strategy for the combined investors and creditors groups - the exit being one of the surviving Big 3 to acquire the new entity.   Leap needs MetroPCS far more than MetroPCS needs Leap.  Leap is a highly leveraged company - piles of debt.  MetroPCS is a much healthier company.  There are every fewer synergies now then when a deal could have been struck in 2007.  The reason for MetroPCS to merge (today) would be to compete in a crowded field; strategically the company would be better able to compete and create an exit strategy for existing equity holders.  Bottom line, MetroPCS is not going to last long by itself.  However, combined with Leap, MetroPCS will be able to last long enough to generate sufficient value so that its existng equity holders can find their exit.  The downside of a merger with Leap is the amount of debt that will drag down a combined company.

The synergies will not grow if they delay a merger.  However, a delay will definitely serve as an incentive for MetroPCS to want to merge because by 2011 the Big 3 will be digging further intoits customer base.

By the way, I do not count T-Mobile as one of the major players. Lets face it the company is an also ran and has survived because they seemed to serve that sector that did not want to buy MetroPCS or Leap services and could not afford or want Sprint, AT&T, or Verizon services. Neither huge nor tiny – just somewhere in between. T-Mobiel is like the middle child – often ignored and trying to get attention.  T-Mobile`s owners are trying to sell off the company now and its technology is not compatible with MetroPCS`s or Leap`s technology.

Getting back to MetroPCS and Leap. The exit strategy for this company is to last the next 2 years through this downturn so that one of the Big 3 (I am thinking Sprint) or even cable companies can purchase the new combined entity.