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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • T Mobile Girl Shows Her Bad Side 13 comments
    Mar 23, 2013 1:02 PM | about stocks: TMUS

    T Mobile has shown its bad side with its efforts to acquire PCS - underpaying for PCS spectrum while leaving the remaining company undercapitalized all to benefit Deutsche Telekom AG. What can PCS shareholders do? Find out in my upcoming article.

    Disclosure: I am long PCS.

    Themes: T Mobile, Carly Foulkes Stocks: TMUS
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  • SafisKusai
    , contributor
    Comments (234) | Send Message
     
    this merger is being done for all the wrong reasons. its actually really disgusting to be honest. the only reason its being done is so deutsche telekom can finally exit america without completely losing their shirts. They were never fully committed to the tmobile experiment and so it has failed, and now they are pouncing at an exit strategy that is good for DT shareholders but pretty awful for PCS shareholders. The business that is being left behind is going to be gutted through the changing of the sensible cdma tech that pcs has to the awful gsm tech that Tmobile has. I personally think PCS should have waited it out for the softbank/sprint merger to happen and let New Sprint gobble them up, at least then it would be a smooth transition for the company. In the telecom industry it is important to learn from past history. When you pair two completely different technologies together that cant really mesh, there are no cost savings, this was learned from sprint nextel. PCS/Tmobile is a disaster waiting to happen.

     

    Long S, CLWR
    24 Mar 2013, 12:37 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » Great points all. I hope you'll get a chance to read the upcoming article. My understanding is that it will get published sometime next week. I tried to touch on some of your points but missed mentioning others (such as the lack of savings due to different technologies). Since you clearly understand this situation, perhaps you could comment on the article.

     

    Separately, I would be interested in how a S and CLWR holder thinks about their deal. The combination make sense to me. The payment to CLWR seems light, but it really depends upon how you think about it. As a standalone going concern, CLWR is weak. As spectrum assets if they are put to their best use, it is valuable.
    24 Mar 2013, 08:07 AM Reply Like
  • SafisKusai
    , contributor
    Comments (234) | Send Message
     
    i have been in and out of sprint for the past few years, and played around with clwr mostly through options. The situation with clearwire is unfortunate because they do have great value, however they also have great debts and costs. Contracts that bind them to sprint and sprints 51% ownership makes it near impossible to change hands. I don't see dish's bid as serious whatsoever, too many clauses and not enough reality. Dish is trying to join an industry that is trying to consolidate and is somewhat laughable. Without Sprint however clwr is likely to die as not many other players have the cash to spend on pumping up clwr's capex.

     

    Telecom is probably one of the most interesting sectors in the market, and over the past year it entered into one of these phases where it writes a lot of history. I think the Softbank merger is a game changer for the industry and VZ and T probably don't realize how big of an impact it will be. I have a good feeling that the smaller players that are still left wont exist very soon: leap, whatever is left from pcs/Tmobile, USM. It doesnt pay to be small anymore.
    24 Mar 2013, 05:22 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » Very interesting. Sounds compelling. I have tried to value CLWR and come up with somewhere between $0.00 and $15.00 per share, with serious arguments for both ends of that range. So, a bit of a brainer. It will be interesting to see how Delaware court treats dissenters.

     

    I hope that you'll read and comment on my PCS article next week. I think that you'll have some important criticisms that people should know about.
    24 Mar 2013, 05:26 PM Reply Like
  • SafisKusai
    , contributor
    Comments (234) | Send Message
     
    lookin forward to it
    24 Mar 2013, 11:32 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » It needs a day or two of editing but should be up soon.
    25 Mar 2013, 07:22 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (120) | Send Message
     
    Are those Lulu mesh tights the T-mobile girl is wearing?
    25 Mar 2013, 12:03 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » Ha.
    25 Mar 2013, 07:24 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (120) | Send Message
     
    Let's see, PCS shareholders are to get approx. $4.09 payment for each share they own prior to the merger and reverse split. After they'll own half as many shares of the new entity. Question is... at what stock price will the new entity trade? Recapitalized they'll pay less tax...
    25 Mar 2013, 01:32 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » Good question. My conclusion is $6 or so but I will have the details in my article. There are some problems with this deal that hurt the value of PCS shares by about $4 in order to get to $10 (including cash payment).
    25 Mar 2013, 07:26 AM Reply Like
  • johnbarleycorn
    , contributor
    Comments (120) | Send Message
     
    Help me through this analysis Chris please...
    25 Mar 2013, 01:34 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » I'll offer what I can.
    25 Mar 2013, 07:26 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4043) | Send Message
     
    Author’s reply » It is the latest Alpha Rich article, up on Seeking Alpha Pro now: http://seekingalpha.co...
    27 Mar 2013, 07:58 PM Reply Like
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