Seeking Alpha

Son reportedly talks Sprint/T-Mobile with banks, wants small breakup fee

  • Bloomberg has joined the WSJ in reporting Sprint (S +6.7%) is trying to obtain financing for a T-Mobile USA (TMUS +4.7%) bid from six banks, and provides additional details.
  • Bloomberg's sources indicate SoftBank (SFTBF) CEO Masayoshi Son has personally talked with banks about obtaining ~$20B in financing. His goal: To buy Deutsche Telekom's (DTEGY) 67% stake in T-Mobile in an all-cash deal.
  • At the same time, Sprint's management is said to be "reluctant" to deal with integrating Sprint and T-Mobile's incompatible 3G networks; Sprint uses the EV-DO air interface, while T-Mobile uses W-CDMA/HSPA. But with SoftBank owning 78% of Sprint, their objections may be rendered moot.
  • Also: With regulatory approval of a Sprint/T-Mobile deal far from certain, Son reportedly wants to avoid agreeing to a large breakup fee. AT&T had to pay a $7B breakup fee to T-Mobile two years ago.
  • Separately, T-Mobile has scheduled a Jan. 8 CES event where it will reveal the fourth part of its "un-carrier" strategy. Part one involved the elimination of phone subsidies and contracts in favor of monthly phone installment plans; part two involved the launch of T-Mobile's Jump smartphone upgrade plans; and part three brought cheap global data roaming and international talk/text plans.
Comments (5)
  • We think that TMo (TMUS) should be taken out for at least $38 -- http://seekingalpha.co...
    20 Dec 2013, 04:32 PM Reply Like
  • Would like the $38 or $50 per the referenced link. However, I calculate $36.45/share. See my earlier post infra.
    21 Dec 2013, 11:44 AM Reply Like
  • S doesn't have to integrate the 3g networks. They can keep them separate as the tower lease contracts are still in effect for 7 years on average. If they focus on integrating and expanding 4g, where the standard is relatively the same, 3g will be moot. If you think S's PPS performed well in 2013, wait until they (finally) have a PE...
    20 Dec 2013, 09:11 PM Reply Like
  • I calculate $36.45/share with about 729,000,000 shares outstanding and the $20,000,000 Son is planning to borrow for the acquisition. Does anyone agree with my calculations?
    21 Dec 2013, 11:44 AM Reply Like
  • Santa got my letter--if the merger is approved.
    21 Dec 2013, 12:08 PM Reply Like
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