T-Mobile/MetroPCS Merger

[JeffDTD]

..............to be a fly on the wall in Hesse's "war room" today.....

[Feech]

http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201210030848BIZWIRE_USPRX____BW5835-1&params=timestamp%7C%7C10/03/2012%208:48%20AM%20ET%7C%7Cheadline%7C%7CT-Mobile%20USA%20and%20MetroPCS%20to%20Combine%2C%20Creating%20Value%20Leader%20in%20U.S.%20Wireless%20Marketplace%7C%7CdocSource%7C%7CBusiness%20Wire%7C%7Cprovider%7C%7CACQUIREMEDIA%7C%7Cbridgesymbol%7C%7CUS;PCS&ticker=PCS

 

 

Pretty cheap if you ask me..

[Feech]

"Combining T-Mobile and MetroPCS’ complementary spectrum to provide greater network coverage, deeper LTE network deployment and a path to at least 20x20 MHz of 4G LTE in many areas. Existing MetroPCS customers will be migrated to a common LTE-based network as they upgrade their handsets"

[Boosted20V]

..............to be a fly on the wall in Hesse's "war room" today.....

 

As discussed above, I don't think Hesse gives a s**t about this. Essentially T-Mo is paying 1.5 bil for spectrum licences and the headache of incorporating two disparate networks.

[Rawvega]

..............to be a fly on the wall in Hesse's "war room" today.....

 

That would indeed be interesting. The important thing for Sprint to do is not panic and make a rash move in response.

[marioc21]

So at least for the near term, T-Mobile and Metro will be run as two separate brands under the new T-Mobile umbrella. I wonder if this means that eventually T-Mo will be the exclusive postpaid carrier while Metro will be their prepaid brand. Like Sprint and Virgin/Boost.

 

http://www.fiercewireless.com/story/reports-deutsche-telekoms-t-mobile-usa-merge-metropcs/2012-10-03?utm_campaign=TwitterEditor-FierceWireless

[JeffDTD]

 

As discussed above' date=' I don't think Hesse gives a s**t about this. Essentially T-Mo is paying 1.5 bil for spectrum licences and the headache of incorporating two disparate networks.[/quote']

 

I agree, he probably doesnt give a rats lunch about it now that the bidding is over, but I would be surprised if this action from their biggest competitor didnt cause he and/or the board to rethink their "wait until NV is over to talk acquisition" mindset. What if you get to 2014/15 and your best opportunities already hooked up or were snatched up? Not likely, but it has to cause some head scratching. And no, i dont disagree that anything which further stresses their cash situation is risky. It is. Like the comment related to the stock price earlier in the thread says "darned if u do darned if u dont"

[JeffDTD]

Delete.

[bigsnake49]

That would indeed be interesting. The important thing for Sprint to do is not panic and make a rash move in response.

 

Again, Sprint's stock is undervalued compared to sales. I'm thinking that Sprint can siphon quite a few of the Metro and T-Mobile customers. They just need to be smart about it.

[JeffDTD]

Delete.

[JeffDTD]

Delete.

[marioc21]

Deal structures can be fascinating. Getting into the specifics of the deal, it appears that Metro will be buying T-Mobile. Then issuing 74% of its common stock to DT. The surviving company will in fact be Metro, but it will trade under the T-Mobile name.

 

The transaction is structured as a recapitalization, in which MetroPCS will declare a 1 for 2 reverse stock split, make a cash payment of $1.5 billion to its shareholders and acquire all of T-Mobile's capital stock by issuing to Deutsche Telekom 74 percent of MetroPCS' common stock on a pro forma basis. DT also will roll its existing intercompany debt into new $15 billion senior unsecured notes of the combined company, thereby providing the combined company with a $500 million unsecured revolving credit facility and provide a $5.5 billion backstop commitment.

 

http://www.fiercewir...-FierceWireless

[centermedic]

http://investing.bus...;PCS&ticker=PCS

 

 

Pretty cheap if you ask me..

Basically it was a stock swap and merger, thats why it was so cheap. The projected financials for the combined company look impressive. Makes me wonder if this will put pressure on the other regional players to merge with a bigger partner.

[Boosted20V]

I agree, he probably doesnt give a rats lunch about it now that the bidding is over, but I would be surprised if this action from their biggest competitor didnt cause he and/or the board to rethink their "wait until NV is over to talk acquisition" mindset. What if you get to 2014/15 and your best opportunities already hooked up or were snatched up? Not likely, but it has to cause some head scratching. And no, i dont disagree that anything which further stresses their cash situation is risky. It is. Like the comment related to the stock price earlier in the thread says "darned if u do darned if u dont"

 

I just can't comprehend paying for prepay customers. I imagine churn is quite high on Metro, I know it is on T-Mo. And given that churn is so high, Sprint can easily grow just by taking dissatisfied customers from this combined entity.

[bigsnake49]

I just can't comprehend paying for prepay customers. I imagine churn is quite high on Metro, I know it is on T-Mo. And given that churn is so high, Sprint can easily grow just by taking dissatisfied customers from this combined entity.

 

Yeah they can, but they have a small window to do it. By next September, I'm thinking that the combined entity will get the iPhone, thereby reducing the reasons for migrating off the combined carrier.

[JeffDTD]

 

I just can't comprehend paying for prepay customers. I imagine churn is quite high on Metro' date=' I know it is on T-Mo. And given that churn is so high, Sprint can easily grow just by taking dissatisfied customers from this combined entity.[/quote']

 

Yeah it sounds like a bit of a sweetheart deal for legacy metro, company stake considering. Id rather sprint give up 26% to a more secure entity.

[JeffDTD]

 

That would indeed be interesting. The important thing for Sprint to do is not panic and make a rash move in response.

 

Aaaagree.

[Rawvega]

I agree, he probably doesnt give a rats lunch about it now that the bidding is over, but I would be surprised if this action from their biggest competitor didnt cause he and/or the board to rethink their "wait until NV is over to talk acquisition" mindset. What if you get to 2014/15 and your best opportunities already hooked up or were snatched up?

 

That is a legitimate risk to consider. As I said earlier, the key is for Sprint not to make a rash move. That said, it probably wouldn't be a bad idea for Hesse to call up Mary Dillon and Hu Meena to put a little bug in their ears and find out exactly where their heads are at.

[bigsnake49]

Yeah it sounds like a bit of a sweetheart deal for legacy metro, company stake considering. Id rather sprint give up 26% to a more secure entity.

What about USCC and C-Spire and the sundry regional CDMA players?

[centermedic]

I think one of two things is going to happen. This will blow up in T-Mo's face ala sprint/nextel or this will force the hand of other regionals to merge.

[Mondays In Flames]

Interesting move from Deutsche Telekom, considering last year they were desperate to leave the US market.

 

 

-Luis

[Rawvega]

Hell, both could happen!

[JeffDTD]

What about USCC and C-Spire and the sundry regional CDMA players?

 

The question is :what do they both think they are worth? You could argue that metro's cards were on the table as soon as news of their failed merger with sprint broke. These two? I suspect they will drive a hard bargain for as 20% or more stock in sprint and 3-5billion. But who knows.

[marioc21]

I just can't comprehend paying for prepay customers. I imagine churn is quite high on Metro, I know it is on T-Mo. And given that churn is so high, Sprint can easily grow just by taking dissatisfied customers from this combined entity.

 

I think you've two issues at work here. One is that T-Mobile's parent wants to minimize it's exposure to the US wireless market. This helps since now it won't be solely bearing the financial burden of the new Company. And it can eventually sell off or reduce its stake in the Company in the future. Second, T-Mobile is acquiring AWS spectrum which pairs well with the Spectrum it already holds. I believe in the deal announcement the T-Mo exect said this lets them use a 20x20 block of spectrum for LTE in a lot places now.

 

Bottom line is that they didn't buy Metro just to pick up the customers.

[Rawvega]

The question is :what do they both think they are worth? You could argue that metro's cards were on the table as soon as news of their failed merger with sprint broke. These two? I suspect they will drive a hard bargain for as 20% or more stock in sprint and $3-5billion. But who knows, neither are public.

 

USCC is indeed public. They trade under the ticker USM. Their current market cap is ~$3.30B and their enterprise value is ~$3.74B.