Jul. 29, 2014, 10:14 AM
- Windstream's (WIN +22.3%) plans to spin off some of its telecom network assets into a REIT (following a favorable IRS ruling) has lit a fire under U.S. telecom carriers, as investors bet more REIT announcements will happen. Some might also be hoping REIT spinoffs spark additional M&A activity in an industry that has seen plenty of it.
- Frontier (FTR +15.8%) and CenturyLink (CTL +8.1%) are also off to the races, and AT&T (T +3.9%), Verizon (VZ +1.9%), and Sprint (S +2%) aren't doing badly either.
- Other gainers include Alaska Communications (ALSK +5.2%), TDS (TDS +4.1%), and Lumos Networks (LMOS +5.5%), as well as Level 3 (LVLT +5.9%) and merger partner TW Telecom (TWTC +5.2%). Level 3 posted a Q2 beat this morning.
- Windstream's spinoff will feature its fiber/copper networks and other real estate. The company expects to retire $3.2B in debt following the spinoff (expected to close in Q1 2015), and to have the REIT raise $3.5B in debt.
- Windstream plans to have an aggregate annual dividend of $0.70/share following the spinoff ($0.60 for the REIT, $0.10 for Windstream proper). That's down from a current $1.00/share.
Jul. 22, 2014, 5:35 PM
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Jul. 15, 2014, 2:13 PM
- Sprint (S -3.7%) and T-Mobile (TMUS -3.1%) plan to form a JV that will raise $10B to spend on next year's giant low-frequency spectrum auction, the WSJ reports.
- The funds are said to be part of the $45B financing package (previous) SoftBank (OTCMKTS:SFTBF) is lining up to enable a Sprint/T-Mobile merger (regulators permitting). T-Mobile will oversee the JV.
- Two months ago, the FCC set rules limiting how much spectrum Verizon and AT&T can buy through the auction. That opens the door for Sprint and T-Mobile to grab a large chunk of the airwaves. Each has a relative dearth of low-frequency spectrum (superior for rural and in-building coverage).
- Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B. Shares of both companies have fallen on the report.
Jul. 15, 2014, 6:41 AM
- Sprint (NYSE:S) Chairman Masayoshi Son is facing higher lending fees for financing the purchase of T-Mobile (NYSE:TMUS), as lenders are expecting a lengthy approval process.
- As of now, the plan includes a drop-dead date of 18 months after the deal’s announcement - at which point it could be terminated. That deadline could also be extended.
- The Sprint takeover review can take at least a year to evaluate, and may not even be approved by regulators insisting on preserving four competitors in the U.S. wireless market. The DOJ previously sued AT&T in 2011 to block its effort to acquire T-Mobile.
Jul. 11, 2014, 1:32 PM
- The Nikkei reports SoftBank (SFTBF) is close to a deal for a Sprint (S +4.4%)/T-Mobile (TMUS +1.9%) merger. Shares of both companies have moved higher.
- Reuters reported 3 weeks ago Sprint and T-Mobile were looking to announce a deal around August, and that the former had lined up a $40B+ debt package. Prior reports mentioned a ~$40/share T-Mobile acquisition price and a $2B breakup fee.
- T-Mobile is still below $34, as doubts about regulatory support for a deal remain high.
- Prior Sprint/T-Mobile coverage
Jul. 8, 2014, 2:42 PM
- CNET reports Sprint (S -1.6%) is testing a new individual postpaid plan in Chicago that provides unlimited voice/data for $50/month to users willing to forgo smartphone subsidies. Unlimited voice and 3GB of data is provided for $40/month.
- Meanwhile, discounted family plans featuring shared data buckets are being tested in San Diego, Portland (Oregon), and Las Vegas: Unlimited voice is provided for $25/line, and a 10GB data bucket is included for $60.
- In Philadelphia, Buffalo, and Providence, discounted versions of Sprint's Framily plans (previous) are being tried out. Whereas Framily plans normally require 7 members for fees to drop to $25/user/month, only 5 are needed in the discounted version.
- Sprint shed 231K postpaid subs in Q1 amid tough competition from a resurgent T-Mobile. SoftBank chief Masayoshi Son has promised Sprint will compete aggressively on promise. Q2 results are due on July 30.
Jun. 24, 2014, 4:27 AM
- Sprint's (S) troubles are not yet over, as the company is still in the backseat for service and product offerings, and lost 2.5M customers in the last five quarters.
- Problems at Sprint date back to its 2005 merger with Nextel that left it with a set of conflicting networks and declining service quality. However, in the past three years Sprint has swapped out old equipment at tens of thousands of cell sites nationwide, in the hope of regaining its market share. Sprint also announced yesterday that it will carry the new Samsung Galaxy S5 Sport.
- In a move resembling last week's T-Mobile announcement, Sprint will also now offer customers a 30-day trial period on its network. Sprint difficulties are also signalling a possible future merger between it an T-Mobile.
Jun. 19, 2014, 6:06 PM
- Sprint (S) has "lined up eight banks" to finance a T-Mobile (TMUS) acquisition, Reuters reports. The companies will reportedly "seek to finalize details of the financing in the coming month so they could announce a merger around August."
- The financing includes a $40B+ debt package featuring a ~$20B bridge loan from Sprint parent SoftBank (SFTBF), and a $20B refinancing of T-Mobile's present debt. Sprint currently has $26.6B in net debt, and T-Mobile roughly $9B.
- Bloomberg reported on June 4 Sprint and T-Mobile were near a deal valuing the latter at ~$40/share. CNBC reported last Friday the companies had agreed on a $2B breakup fee, and to have the post-merger company (should regulators allow it to exist) go under the T-Mobile name.
- S +0.5% AH. TMUS +0.9%.
Jun. 18, 2014, 5:13 AM
- T-Mobile (TMUS) is looking to purchase a few smaller competitors to hedge itself in case a Sprint (S) merger does not come down the pipe.
- The smaller carriers have a "low-band spectrum", which offers greater service in urban areas due to its ability to penetrate buildings. The company is looking for this advantage in order increase its share in the metropolitan market.
Jun. 13, 2014, 10:28 AM
- CNBC's reported breakup fee figure is higher than the $1B+ previously reported by the WSJ, but still well below the $4B T-Mobile (TMUS +0.2%) was paid by AT&T.
- The TV network also reports Sprint (S +1.8%) and T-Mobile have agreed the post-merger company will be called T-Mobile. Though the carriers are roughly equal in size, T-Mobile has been performing much better as of late, and keeping its name would please parent Deutsche Telekom (DTEGY), which uses the T-Mobile brand in other markets.
- Past reports have noted brash T-Mobile CEO John Legere will likely be the head of the combined company.
- Sprint is trading higher. With skepticism about regulatory approval still running high, a reports about a relatively low breakup fee might be going over well with the Street.
- Previous: Sprint, T-Mobile reportedly near agreement on ~$40/share deal
Jun. 10, 2014, 9:17 AM
- Believing there's a 70% chance a T-Mobile deal will go through, Macquarie has upgraded Sprint (S) to Outperform.
- Macquarie downgraded Sprint to Neutral on Dec. 2, when shares were at $8.39. Prior to that, it upgraded to Outperform on Oct. 16, when shares were at $6.03.
- Investors remain more skeptical a T-Mobile deal will go through, as evidenced by the fact T-Mobile shares trade 15% below a reported $40/share merger price.
- Previous: Sprint, T-Mobile turn negative as Street mulls merger reports
Jun. 5, 2014, 12:17 PM
- With worries about the DOJ/FCC's willingness to approve a Sprint (S -2.6%)/T-Mobile (TMUS -2%) merger still running high, shares of both carriers are now lower following reports stating they've largely agreed to the terms of cash/stock deal that would value T-Mobile at ~$40/share.
- T-Mobile is now 16% below the rumored acquisition price. A deal would reportedly require Sprint to pay ~$16B in cash, issue a similar amount of stock, and assume $9B worth of net debt.
- Sprint already had $26.6B in net debt at the end of Q1, and has since used its receivables to land a $1.3B credit facility.
- The WSJ reports Sprint would pay T-Mobile a $1B+ breakup fee consisting of cash and other assets if the deal is shot down. T-Mobile received a $4B breakup fee from AT&T ($3B in cash) in 2011 after regulators derailed their planned merger.
Jun. 4, 2014, 5:56 PM
- Bloomberg reports Sprint (S) and T-Mobile USA (TMUS) are near an agreement for a deal that would value T-Mobile at ~$40/share. The WSJ is also reporting a ~$40/share price.
- S +3.7% AH. TMUS +3.2% to $36.02 - a price that points to ongoing regulatory worries.
- Sprint's offer will reportedly feature a 50-50 cash/stock split, and leave Deutsche Telekom (DTEGY), which currently owns 67% of T-Mobile, with a 15% stake in the combined company. Bloomberg's sources state an announcement could happen by July.
- In addition, the carriers are reportedly close to agreeing on a breakup fee - Sprint and parent SoftBank (SFTBF) have reportedly been pushing for a smaller breakup fee for a deal that's bound to face tough DOJ/FCC scrutiny; T-Mobile and Deutsche Telekom have wanted a bigger one.
- More on Sprint/T-Mobile
Jun. 3, 2014, 4:07 PM
- Verizon (VZ -1.5%), Sprint (S -2.2%), and T-Mobile (TMUS -1%) have each closed lower after AT&T guided for no Q2 wireless service revenue growth, and a weak wireless service EBITDA margin.
- Investors have already been nervous about the impact a T-Mobile-driven price war stands to have on the top and bottom lines of rivals. AT&T mentioned adoption of its Mobile Share Value plans, which saw price cuts after T-Mobile announced a series of aggressive moves, are pressuring its ARPU.
- Verizon, though offering some modest promotions, has generally stuck to a premium pricing strategy; its disappointing Q1 postpaid subscriber adds - 539K net adds with an estimated 95K decline for phones - fueled questions about whether a strategy change is needed. The fact AT&T expects to add 800K+ postpaid subs in Q2 might heighten those concerns.
- Sprint has been more aggressive than Verizon, launching its low-cost Framily plans in January and heavily promoting them. But it lost 231K postpaid subs in Q1 as it scrambles to neutralize Verizon/AT&T's 4G coverage leads.
- One encouraging AT&T datapoint: The carrier expects ~2/3 of postpaid smartphone subs to be on subsidy-free Mobile Share Value plans by year's end. Both AT&T and peers have made slashing subsidy spend a priority.
May. 29, 2014, 9:12 AM
- Japan's Kyodo news agency reports Deutsche Telekom (DTEGY) has signed off on a SoftBank (SFTBF)/Sprint (S) bid to acquire its 67% stake in T-Mobile USA (TMUS).
- DT has previously suggested it's open to a deal as SoftBank/Sprint worked to line up financing - in addition to T-Mobile's equity, a deal has to account for $8.7B in net debt.
- But all signs suggest regulators remain wary of a tie-up lowering the number of nationwide U.S. mobile carriers to three, in spite of Masayoshi Son's relentless PR efforts.
- TMUS +1.6% premarket. S +2.5%.
May. 29, 2014, 4:15 AM
- Sprint (S) Chairman Masayoshi Son reasons that the rise in telecom and cable mergers should allow his company to buy rival T-Mobile (TMUS). Three big mergers have taken place in recent months with Verizon (VZ) acquiring Vodafone (VOD) for $130B, Comcast (CMCSA) buying Time Warner Cable (TWC) for $45B, and the AT&T (T) purchase of DirecTV (DTV) for $49B.
- "Access to the Internet is currently dominated by three giants with no sizable competitor," says Son.
- Although the company has not yet made a formal bid on T-Mobile, it looks to lay the framework for a future purchase.
- Antitrust authorities have previously frowned on such a deal, as it would cut the number of national competitors in the wireless industry to three from four.
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