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metropcsThe blockbuster merger between T-Mobile and MetroPCS is encountering some new headwinds after  Institutional Shareholder Services on Wednesday recommended that shareholders vote against the deal.

According to a Bloomberg report, ISS opposed the deal “because of unfavorable terms and the potential for MetroPCS to thrive as an independent company.”

Earlier this month, the Federal Communications Commission approved the merger between T-Mobile and MetroPCS, and the board sent a letter to shareholders urging them to do so as well. A vote is expected on April 12th.

Having ISS, one of the most prominent shareholder advisory firms, recommend against the deal could sway some shareholders who are on the fence. It also helps strengthen the position of MetroPCS’ largest shareholder, Paulson & Co, which also opposes the deal.

John Legere
T-Mobile CEO John Legere

“Absent merging with T-Mobile, PCS will still have $1.5 billion of cash to dedicate to new spectrum in some way and could continue operating as a stand-alone company,” ISS said in their report. ISS said that shareholders should get more than 26 percent of the combined company.

The Wall Street Journal reports that the recommendation from ISS “lengthens the odds for the merger” of the fourth and fifth largest wireless companies in the U.S. Earlier this week, T-Mobile’s John Legere suggested that the deal will go through, and he criticized “greedy hedge funds” for trying to make more money off the merger.

However, Bloomberg notes that few other options exist at this point since no other suitors have emerged for MetroPCS, and rejecting the merger and staying an independent company could create more problems.

If a deal falls apart, it would mark the second time in the past 15 months that Bellevue-based T-Mobile has failed to merge. In December 2011, AT&T dropped its $39 bid for T-Mobile over regulatory pressures.

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