Deutsche Telekom, the parent company of T-Mobile USA, says it is merging its cell phone business with MetroPCS Communications.

This transaction is expcted to create a value carrier in the U.S. wireless marketplace, which will deliver a wider selection of affordable products and services, deeper network coverage and a clear-cut technology path to one common LTE network. Deutsche Telekom said that the combined company, which will retain the T-Mobile name, will have the expanded scale, spectrum and financial resources to aggressively compete with the other national U.S. wireless carriers.

Deutsche Telekom AG will hold 74 percent of the new business. MetroPCS's shareholders will have the remaining stake and receive a payment of about $1.5 billion.

"We are extremely pleased to announce this transaction with MetroPCS, which enhances Deutsche Telekom's position in the expanding U.S. wireless market," said Rene Obermann, Chief Executive Officer of Deutsche Telekom. "The T-Mobile and MetroPCS brands are a great strategic fit - both operationally and culturally. The new company will be the value leader in wireless with the scale, spectrum and financial and other resources to expand its geographic coverage, broaden choice among all types of customers and continue to innovate, especially around the next-generation LTE network. We are committed to creating a sustainable and financially viable national challenger in the U.S., and we believe this combination helps us deliver on that commitment."

The company will operate T-Mobile and MetroPCS as separate customer units. After closing, the company's headquarters will be in Bellevue, Washington and it will retain a significant presence in Dallas, Texas.

Dallas-based MetroPCS has 9.3 million subscribers but the transaction still leaves T-Mobile USA with 33.2 million subscribers - trailing the market's No. 3, Sprint Nextel Corp.