T-Mobile USA makes stock market debut
US telecoms market still uncertain as Intel gets behind Softbank in battle for Sprint, and Clearwire accepts more funding
Published: 1 May, 2013
The US telecoms landscape is in flux again. The merged T-Mobile/MetroPCS company makes its stock market debut today, while the battle for Sprint and Clearwire ownership continues.
The new publicly listed cellco will trade on the New York Stock Exchange under the ticker of TMUS and the enlarged company will retain the T-Mobile USA name and headquarters. T-Mobile's former parent Deutsche Telekom retains 74% share in the merged entity while MetroPCS shareholders own the rest, plus receiving $1.5bn in cash. Taking account of the cash payment and a loan provided by DT, the stock could start trading in a range of $15 to $16 a share, say analysts.
The merger deal was approved on April 24 after DT sweetened the terms to saddle the enlarged operator with less debt. MetroPCS, which was publicly traded before, has seen its stock gain 19% this year, though it has lost 13% since the merger deal was announced on October 2 last year.
Meanwhile, the future ownership of TMo's nearest rival, Sprint, remains in doubt, with Softbank and Dish Network offering rival bids. Intel has come out in favour of the Japanese deal, with CEO Paul Otellini arguing, in a letter to the FCC, that the US needs new blood and increased wireless competition.
According to Reuters, Otellini told FCC chair Julius Genachowski that the idea of Softbank, one of the world's most advanced 4G innovators, building a third US wireless network was "very compelling", adding: "We need this competition in the wireless space as the ATT/Verizon model is not giving that to consumers at this time."
An Intel representative said Otellini had intervened because Softbank is an Intel business partner and that his letter "reflects our view that the addition of a third competitor to the market will be beneficial to consumers and SoftBank has a reputation as being a market disruptor which can provide benefits as well."
Softbank itself has been defending its $20.1bn offer for 70% in Sprint. Its CEO Masayoshi Son outlined 11 key areas where the Japanese deal provides greater benefits to Sprint shareholders and calculated that its offer provides the US firm's shareholders with cash, stock and synergies collectively representing a 21% premium to the Dish proposal. Earlier this week, Softbank permitted Sprint to seek more information from Dish about its rival bid of $25.5bn for 100% of the operator. Sprint has formed a special committee of independent directors to evaluate Dish's offer.
Meanwhile, Sprint's joint venture Clearwire has been assessing its own future options, having received bids for a full takeover by Sprint, and a counterbid from Dish. Of course, the outcome will depend on who wins Sprint's hand, but Clearwire's large swathes of 2.5GHz 4G spectrum is an a key attraction both for Softbank and Dish. The WiMAX-turned-LTE player has chosen to take finding from Sprint for the third month in a row, generally taken as a sign it favors full ownership by its largest stakeholder, even though some other investors have argued the offer undervalues its spectrum assets. Clearwire turned down the funding available under a separate deal with Sprint in January and February, but has accepted it since then.
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