Iliad Bails On T-Mobile Acquisition Attempt

Iliad today said it will no longer pursue an acquisition of T-Mobile U.S. The company first proposed to acquire 56% of the company back in July, but T-Mobile's majority owner Deutsche Telekom rejected the bid. 

Iliad later put together more resources with the help of financiers and proposed to acquire 67% of the company for $36 per share. Iliad arrived at today's decision "following exchanges with Deutsche Telekom and selected board members of T-Mobile US who have refused to entertain its new offer." Deutsche Telekom has long sought to rid itself of T-Mobile, but has yet to successfully sell the company. Iliad believed acquiring T-Mobile would have helped the combined entities realize $2 billion in annual cost savings, as well as given Iliad a toehold in the U.S. market.

Sprint Executives Talk T-Mobile With Justice Department

Sprint's senior executives recently met with members of the U.S. Department of Justice to ascertain just how much opposition a merger between Sprint and T-Mobile might face. The meeting included Masayoshi Son, CEO of +SoftBankCorp, which holds a majority stake in Sprint, and Dan Hesse, CEO of +Sprint. Justice Department officials told Son and Hesse that such a deal would "face skepticism" from government regulators, according to people familiar with the details of the conversation. Regulators appear to favor the current competitive environment, which includes four national network operators, as opposed to three were Sprint and T-Mobile to combine. Sprint already has commitments from banks to finance the deal. SoftBank and +Deutsche Telekom, which owns 67% of +T-Mobile, have met to iron out the broad strokes of a merger/acquisition. Many details have yet to be finalized before an acquisition is formally proposed.


Source: Wall Street Journal

Department Of Justice Clears Softbank-Sprint Merger

The SoftBank-Sprint merger is almost official. Despite the recent news that SoftBank has been in talks with DeutscheTelekom to set up a backup plan to purchase T-Mobile US if the deal with Sprint went south, it looks like this deal is going to go through. The Department of Justice has cleared the SoftBank-Sprint merger to continue. 

The DOJ had asked the FCC to hold off on making a decision, so the deal could be investigated, but everything is looking good. So, that means the only thing left is for the FCC to approve the merger of course, the competing bid from Dish could still cause problems with the deal. 

Source: FCC

SoftBank May Be Looking At T-Mobile If Sprint Deal Collapses

SoftBank might use T-Mobile USA as its back-up option should its attempt to acquire a 70% equity stake in Sprint fall through, reports Reuters. Citing unnamed sources, Reuters said that SoftBank has held discussions over the matter with Deutsche Telekom, which owns 74% of T-Mobile. One possible scenario would have SoftBank purchase the 74% owned by Deutsche Telekom, says Reuters' source. 

SoftBank is paying $20.1 billion for 70% of Sprint, but T-Mobile's market capitalization stands at about $15 billion. SoftBank's deal has already been approved by the SEC, DOJ, FBI, and DHS. It is still undergoing review at the Federal Communications Commission and faces a Sprint shareholder vote on June 12.

MetroPCS Shareholders Approve T-Mobile Deal

MetroPCS shareholders today have voted in favor of merging with T-Mobile USA, reports Bloomberg. Deutsche Telekom (T-Mobile's parent company) improved the terms of the deal for MetroPCS earlier this month, and MetroPCS' board has already approved it. The deal also has full U.S. regulatory approval. Now that the shareholders have voted in favor of the deal, T-Mobile USA and MetroPCS can finalize their merger. Deutsche Telekom said it expects the deal to close by May 1. "This is a major step for Deutsche Telekom," said Rene Obermann, CEO of Deutsche Telekom. "The merger with MetroPCS is extremely important, since it enables us to be more aggressive in the USA."


Source: Phone Scoop

T-Mobile Announces MetroPCS Merger

T-Mobile this morning announced that it's merging with MetroPCS in a $1.5 billion deal. The two companies will unite under the T-Mobile name, with current T-Mobile parent company Deutsche Telekom to keep a 74 percent stake. The rest goes to MetroPCS shareholders, who also get the cash.

MetroPCS already has LTE up and running, a technology sorely lacking from T-Mobile's current U.S. offerings, so we'd expect that's part of the impetus behind all this. But it'll take a little time to get all that worked out.

• The two companies actually will remain operating as fairly separate entities. Two business units. One network. MetroPCS isn't going anywhere for a few years.
• They're hoping to have GSM-capable devices ready to sell on MetroPCS when the deal closes next year.
• As we figured, LTE's playing ia big part here.

T-Mobile Parent Company Reportedly Close To A Deal For MetroPCS

MetroPCS, one of the top bargain wireless carriers in the United States, may soon be acquired by T-Mobile parent company Deutsche Telekom. StreetInsider on Tuesday posted a message on its Twitter account saying that the German telecom company was “said to be near deal with MetroPCS Communications on T-Mobile,” implying that MetroPCS and T-Mobile could soon merge to create a large wireless carrier more capable of competing with rivals Verizon (VZ), AT&T (T) and Sprint (S).

T-Mobile USA Targeted In Private Equity Buyout

T-Mobile USA is being targeted by former telecommunications executive Sol Trujillo, who is trying to generate enough interest among private equity firms to buy all or part of the carrier, according to a Bloomberg article. The report, which cited unnamed sources familiar with the matter, said that so far Trujillo's attempts to develop interest in such an acquisition have been unsuccessful. 

Trujillo, who used to head  U.S. West Communications, Orange and Telstra, has talked with the Blackstone Group and KKR about a bid, though the firms are skeptical of any deal. All of the parties declined to comment, Bloomberg said. AT&T's $39 billion acquisition of T-Mobile fell apart last year amid resistance from regulators. 

Deutsche Telekom remains open to a whole or partial sale of the company, the report said, but noted that a sale to private equity firms has not been discussed by the German company's board.

In May Deutsche Telekom CEO Rene Obermann said it was unlikely DT would try to sell T-Mobile again following the collapse of the AT&T deal. "We continue to look for a long-term solution to improve earnings in our U.S. business," Obermann told shareholders at Deutsche Telekom's annual general meeting. "However, a complete sale like the one to AT&T is considered unlikely."

Interestingly, the DT chief also said at the time that the company was not excluding "any option for the T-Mobile unit in the U.S., also not a merger." Obermann said the company was exploring ways to increase its return on capital or reduce its capital investment in the market, and is looking at other partnerships and other unnamed "non-organic steps."

T-Mobile is embarking on a $4 billion network upgrade to launch LTE next year on its 1700 MHz AWS spectrum and refarm its 1900 MHz PCS spectrum for HSPA+ services. The company received AWS spectrum from AT&T as a result of the collapse of the deal, and is now trying to swap AWS spectrum with Verizon Wireless. Spectrum is seen as T-Mobile's most valuable asset. Meanwhile, the carrier is trying to sell off its 7,000 U.S. towers, most likely to a tower company, with Crown Castle reportedly the lead bidder.

Curiously, the Bloomberg report also said that Trujillo has also sought private equity firms to fund a buyout of Sprint Nextel. However, such a deal is considered highly unlikely; Sprint declined to comment, according to Bloomberg.

"Financing is cheap right now. But even though it's possible, it doesn't mean that such a deal is going to happen," Tom Taulli, a consultant for mergers and acquisitions, told Bloomberg. "We've not seen many $10 billion-plus leveraged buyouts anywhere."

Deutsche Telecom Would Consider A Merger, But Won’t Sell T-Mobile

While addressing shareholders at the company’s annual meeting in Cologne, Germany, Deutsche Telekom CEO Rene Obermann told investors that a complete takeover of T-Mobile USA was out of the question after AT&T’s very public failed bid last year. Obermann did tell investors that it was considering all other options, including a potential merger of its T-Mobile USA business unit with another organization.

There are several options on the table in such a scenario; Sprint has had its eye on T-Mobile USA for a while, and a combined company would present a large competitor to AT&T and Verizon. Such a scenario is unlikely, however, as the technology these companies employ is so different that it would be extremely costly to make the networks compatible.

The more likely potential suitor is MetroPCS, as recent rumors have suggested that the two companies are actively speaking about a possible merger. Bloomberg reported a few weeks back that the company was essentially looking to do a joint venture with MetroPCS, with Deutsche Telekom holding the majority stake of the combined company. The deal could be similar to the Everything Everywhere carrier in the UK, a joint venture between T-Mobile and Orange. Deutsche Telekom is also considering a network sharing agreement with MetroPCS or Sprint, which would have the companies sharing spectrum but maintaining their current status as standalone organizations.

Meanwhile, it’s business as usual for T-Mobile USA. The company is beginning to actively build out an LTE network over the next two years. Time will tell the fate of T-Mobile USA, though the message from Deutsche Telekom is still crystal clear.

AT&T Considered Acquiring Leap

AT&T considered purchasing Leap following its failed attempt to acquire T-Mobile USA from Deutsche Telekom for $39 billion. The talks were held in recent months and it remains unknown if the two carriers are still in discussions, Reuters said in a report on Friday. Leap is currently valued at about $400 million and the acquisition would help AT&T gain spectrum it argues is needed as it continues to add additional subscribers and builds out its 4G LTE network.

AT&T isn’t the only one currently shopping around for smaller carriers. T-Mobile’s parent company Deutsche Telekom has also been interested in acquiring MetroPCS, sources speaking to Reuters said recently. MetroPCS uses different radio frequencies, CDMA instead of the GSM network T-Mobile currently runs, however, which had some skeptics questioning the deal.

T-Mobile Looking To Merge With MetroPCS

T-Mobile’s parent company, Deutsche Telekom AG, has reportedly been discussing a potential merger with MetroPCS, according to Bloomberg. The talks come as T-Mobile continues to suffer from large subscriber defections, having lost 802,000 net customers in the fourth quarter of 2011 alone. Deutsche Telekom is considering a stock-swap transaction that would give the German company control over the combined entity, which would be publicly listed, although an outright sale of T-Mobile is possible too. T-Mobile, the nation’s fourth largest carrier, has been looking for options since its failed merger with AT&T last November. MetroPCS has 9.5 million subscribers as of January 2012 and operates the fifth largest wireless network in the United States.

T-Mobile Could Net $3 Billion Through Tower Sale

T-Mobile’s exploration of a sale of its tower system could net the company as much as $3 billion for parent Deutsche Telekom, according to Macquarie Capital USA Inc. Macquarie analyst Kevin Smithen wrote in a note that American Tower Corp., Crown Castle International Corp. and SBA Communications Corp are all in “a hotly contested auction” of T-Mobile towers. The expected price is at least $2.25 billion but could go as high as $3 billion.

“All three tower companies have expressed strong interest” in T-Mobile towers, Smithen wrote.

T-Mobile is considering the tower sale as a way to fund future spectrum purchases and a LTE network, Deutsche Telekom’s Chief Financial Officer Timotheus Hoettges said last month.

Smithen estimated that T-Mobile currently has 7,500, making up the largest network that would go up for sale barring any future offer from AT&T or Verizon Wireless.

Deutsche Telekom declined to comment as did representatives for American Tower, Crown Castle and SBA communications.

This move isn’t unheard of as Sprint undertook a similar offer three years ago agreeing to sell their cellular towers to TowerCo and then signing a lease for the same towers. Sprint sold approximately 3,080 towers raising $670 million dollars which went to pay down Sprint’s debt. This move wouldn’t see T-Mobile giving up any tower space nor would coverage be affected in anyway. T-Mobile would simply turn from buyer to leaser and pocketing the cash. I’d much rather see T-Mobile build an LTE network on their own through the money generated via a tower sale than having to seek an outside partner.

T-Mobile Plan to Sell Towers

T-Mobile will apparently look to sell towers, among other things, to raise money for significant network upgrades. Their desire to keep customer cancellation down is directly tied into their network as many people tend to leave T-Mobile due to bad network performance and subpar performance compared to their rivals.

We don’t see T-Mobile completely tanking anytime soon but the general consensus was that they needed to attack their issues with a big sense of urgency. It was extremely clear before the proposal that Deutsche Telekom was unhappy with the US devision’s performance and the proposal all but confirmed that. 

AT&T to Offer Bigger Asset Sales to Save Takeover

AT&T Inc., with its T-Mobile USA takeover facing regulatory opposition, is preparing the biggest remedy proposal yet to the Justice Department to salvage the $39 billion deal, according to a person familiar with the plan.

The company is considering an offer to divest a significantly larger portion of assets than it had initially expected, said the person, who declined to be identified because the plan isn’t public. Though the exact size of the disposals hasn’t been determined, they could be as much as 40 percent of T-Mobile USA’s assets, the person said.

The asset sale is an attempt to address the concerns of the Justice Department, which sued to block the takeover on Aug. 31, saying the deal would “substantially lessen competition” in the wireless market. The acquisition was dealt another blow on Nov. 22, with the Federal Communications Commission signaling an attempt to block it.

“It’s going to be problematic for AT&T to find a successful divestiture solution,” said Kevin Smithen, an analyst with Macquarie Securities USA Inc. in New York. The pool of potential buyers isn’t very big and those that might be interested probably wouldn’t have a chance, Smithen said. “It’s unlikely that the DOJ would allow a big competitor like Verizon to purchase the assets,” Smithen said.

Customers Versus Spectrum

ATT’s proposal is likely to include the divestiture of a higher share of customers and lower percentage of spectrum, said the person familiar with the matter. The company needs more capacity to serve users as it adds customers and more of them adopt data-intensive smartphones.

AT&T, based in Dallas, fell 0.5 percent to $27.41 yesterday in New York and has lost 6.7 percent this year. T-Mobile owner Deutsche Telekom AG added 1.6 percent to 8.83 euros in Frankfurt and has declined 8.6 percent this year.

Brad Burns, an AT&T spokesman, and Andreas Fuchs, a Deutsche Telekom spokesman, declined to comment.

The asset-sale proposal, which could come as early as the next Justice Department hearing on Nov. 30, might be the only remaining option if the second-largest U.S. wireless operator wants to avoid a lengthy court battle in its bid to become the country’s top mobile carrier. The purchase may vault it past Verizon Wireless, depending on the size of the divestitures.

On Nov. 24, AT&T and Deutsche Telekom asked to pull their deal applications to the FCC so the companies could better focus on the Justice Department lawsuit. AT&T also said it would take a one-time charge of $4 billion to cover the breakup fee it will need to pay to Deutsche Telekom if the deal fails.

‘All or Nothing’

One approach is to propose a remedy that would lessen the market impact of losing the fourth-largest wireless service provider. AT&T has been in discussions with MetroPCS Communications Inc. and Leap Wireless International Inc. to sell spectrum and customers as a way of propping up competition in the absence of T-Mobile.

The second approach is to fight the court case, which is scheduled to begin Feb. 13.

“If there were a last, best offer to be made, they would have made it a long time ago,” said Craig Moffett, a Sanford C. Bernstein & Co. analyst in New York, who has a “market perform” rating on AT&T shares. “It’s very hard to envision a solution that would satisfy the problems the DOJ found with the deal. Realistically, AT&T is going to take its chances in court in February. It’s all or nothing.”

According to a term in the agreement, AT&T would be able to pay less than the deal’s original $39 billion value if regulators demand asset sales that surpass 20 percent of that figure, or about $7.8 billion, three people with direct knowledge of the situation said Sept. 7.

AT&T could walk away from the deal and pay Deutsche Telekom a breakup fee if the concessions requested top 40 percent of that value, the people said. If the deal doesn’t happen there’s no way AT&T can avoid paying the breakup fee, the people said.