UPDATE: Nomura Downgraded MetroPCS Communications to Reduce on Merger Complexities

Nomura reduced its rating on MetroPCS Communications PCS from Neutral to Reduce and lowered its price target from $10.50 to $6. Nomura noted, "MetroPCS announced a merger with T-Mobile USA, with Deutsche Telekom owning 74% of the surviving public entity. While this deal has useful aspects, namely spectrum and network synergies, we don‟t believe it fixes problems with marketing and branding that have been particularly troublesome for T-Mobile. This merger brings the complexity of managing multiple networks on multiple technologies, transitioning both customer bases to 4G LTE, refarming spectrum, and harmonizing rate plans and distribution strategies. Our updated $10.50 MetroPCS target price, 14% below current market price, is based on ~4.5x pro forma 2013E EV/EBITDA, pre-synergies. We believe the discount to peers is warranted given the continued uncertainty of the combined company‟s growth prospects post transaction." MetroPCS Communications closed at $12.24 on Wednesday.