T-Mobile and its parent company Deutsche Telekom have a deal in place to acquire competitor MetroPCS in a move that reports claim is driven by the need for spectrum. Gaining more spectrum is key for wireless service providers as they work to keep up with growing demand for voice and data capabilities.

According to Fox Business, combining the technologies used by T-Mobile and MetroPCS could prove a bit difficult in the short term, as the former uses GSM and HSPA+, while the latter works off a CDMA network. Plus, MetroPCS has already rolled out LTE technology, which is something T-Mobile plans to do in the next year or so.

T-Mobile’s acquisition of MetroPCS comes not long after it was the subject of such a deal itself. AT&T was ready to purchase the service provider from Deutsche Telekom for $39 billion until being blocked by the Federal Communications Commission.

Yankee Group Senior Analyst Rich Karpinski comments

“While this combination of GSM (T-Mobile) and CDMA (MetroPCS) operators raised some eyebrows at first glance, T-Mobile executives today laid out a creative network transition and go-to-market strategy aimed at securing T-Mobile’s place in the highly-competitive U.S. mobile market. New T-Mobile CEO John Legere hinted that the operator had a few weapons it had yet to reveal in its so-called ‘challenger’ strategy, but even so, the ones it did lay bare today showed the operator might indeed have a fighting chance. 

On the network front, T-Mobile plans to move MetroPCS’ prepaid customers as quickly as possible onto T-Mobile’s network, by 2015 shutting down the MetroPCS network entirely and refarming the spectrum to support its own LTE network (which it will start deploying next year). That move will improve T-Mobile’s spectrum position by as much as 40 percent in some markets, enabling it to deploy a 2x 20MHz network that would compete with larger rivals, T-Mobile execs claimed. As for services/pricing, T-Mobile plans to double down on its current strategy of focusing on the value end of the market, not just pure prepaid but hybrid plans that combine bring your own or finance unsubsidized devices with low-cost data plans, including the new unlimited data plans it introduced last month.

What’s the bottom line? While the deal has its risks, it immediately positions T-Mobile as a legitimate contender with a unique network and customer strategy—things it lacked following the fall-through of its merger with AT&T. It puts the squeeze on No. 3 operator Sprint. And it leaves smaller/regional operators—such as prepaid operator Leap Wireless/Cricket or regional players such as C-Spire and U.S. Cellular—either searching for their own dance partners or looking for unmined niches (geographic- or market-based) they can lock in as their own.”