Aug. 5, 2014, 3:59 PM
- The WSJ reports T-Mobile USA (TMUS +0.8%) has rejected Iliad's (OTC:ILIAF) request for access to its books, and won't change its mind in the absence of a better bid. The FT reports a formal rejection of Iliad's $33/share offer for a 56.6% stake in T-Mobile could arrive tomorrow.
- As it is, Deutsche Telekom (OTCQX:DTEGY) was reported to have liked Sprint's (S -1.4%) offer better. Sprint and parent SoftBank (OTCPK:SFTBF) are rumored to be offering ~$40/share, but their bid also carries much more regulatory risk.
- Reuters reports Iliad is talking with investors for help in sweetening its offer. Sources state the carrier has engaged pay-TV providers Dish , Cox, and Charter, as well as infrastructure, pension, and sovereign wealth funds.
- The news service adds DT is (not surprisingly) skeptical about Iliad's claim a merger between a French carrier and a U.S. carrier will yield $10B in synergies.
Aug. 1, 2014, 4:20 PM
- "If two of the largest companies are able to bid as one combined entity in the auction, their combined resources may have the effect of suppressing meaningful competition," says the FCC in a blog post. The post outlines a proposal by chairman Tom Wheeler that bars carriers from jointly bidding in next year's huge low-frequency spectrum auctions.
- The WSJ reported two weeks ago Sprint (S +1.4%) and T-Mobile (TMUS +1.4%), each of whom have a dearth of low-frequency spectrum relative to AT&T and Verizon, plan to form a JV that would raise $10B to jointly bid in the auction. The funds would be obtained through a $45B financing package SoftBank is lining up for a Sprint/T-Mobile merger.
- "It’s certainly a hint that they are predisposed against a merger," says analyst Craig Moffett about the FCC's stance. Prospective T-Mobile acquirer Iliad (OTC:ILIAF) must be pleased.
Aug. 1, 2014, 4:08 AM| 5 Comments
Jul. 31, 2014, 3:58 PM
- Sources tell Bloomberg T-Mobile USA (TMUS +6.7%) parent Deutsche Telekom (OTCQX:DTEGY) views Iliad's (OTC:ILIAF) $33/share offer for a 56.6% stake in T-Mobile as less competitive than Sprint's (S -5.9%) bid, previously reported to be around $40/share.
- Though Iliad declares its bid values the T-Mobile shares it won't own at $40.50, that figure includes $10B worth of synergies the French carrier predicts a merger will yield. Sprint and SoftBank (OTCPK:SFTBF), of course, predict their offer would also yield major synergies.
- "Iliad is about a third of the size of T-Mobile US, and we don't think there would be synergies from the deal," says analyst Jonathan Chaplin. He adds a deal will be tough to finance without Iliad founder/majority shareholder Xavier Neil surrendering control.
- Nonetheless, T-Mobile has rallied to $33 on news of Iliad's bid, which is bound to face less FCC/DOJ scrutiny if accepted and successfully financed.
- The offer is overshadowing a solid Q2 report from T-Mobile. The carrier saw 1.5M net customer adds in Q2 (up from 1.3M in Q1), slightly more than Verizon's Q2 adds and well above AT&T and Sprint's. Branded postpaid net adds totaled 908K (579K phone adds), and branded prepaid net adds 102K. Service revenue rose 7.1% Y/Y.
Jul. 31, 2014, 1:02 PM
- France's Iliad (OTC:ILIAF) is offering $15B in cash for a 56.6% stake in T-Mobile USA (TMUS +7.3%) at a price of $33/share. Iliad values the remaining 43.4% at $40.50/share. Sprint (S -5.3%) has been reported to be planning a ~$40/share deal.
- Iliad says it has obtained financing from unnamed banks, and would also do a capital raise to help pay for the deal. One issue: Iliad has a current market cap of just $16B, less than T-Mobile's $24.8B and Sprint's $30.6B. Sprint has reportedly lined up a $40B+ debt package to finance a T-Mobile deal.
- A source tells the WSJ Iliad, which has upended the French mobile market with its aggressive pricing, views a T-Mobile merger as a "one-time opportunity to enter the world's-largest telecoms market."
- Iliad also thinks (perhaps with good reason, given FCC/DOJ remarks) regulators will be more comfortable with its bid than Sprint's, since Iliad has no U.S. presence.
- AT&T (T -2%) and Verizon (VZ -2.3%) have joined Sprint in selling off, as investors mull the possibility of a deal that would leave the number of nationwide U.S. carriers at 4. Concerns about Iliad's pricing history might also be weighing on shares.
- Related tickers: OTCPK:SFTBF, OTCQX:DTEGY
- Earlier: Iliad reportedly bids for T-Mobile USA
Jul. 31, 2014, 11:54 AM| 2 Comments
Jul. 30, 2014, 9:48 AM
- The Sprint (S +1.2%) platform lost 181K postpaid subs and 542K prepaid subs in Q2, compared with losses of 231K and 364K in Q1. After factoring Nextel declines, total retail postpaid and prepaid losses were respectively 245K and 619K. 530K wholesale/affiliate subs were added.
- Verizon and AT&T have delivered much better Q2 subscriber add figures (moreso for postpaid than prepaid), and would-be merger partner T-Mobile is expected to tomorrow.
- However, cost controls allowed Sprint's adjusted EBITDA to rise 30% Y/Y to $1.83B (a faster growth rate than Q1's 22%), and adjusted EBITDA margin rose to 23.8% from 17.4% a year ago. Capex fell to $1.25B from $1.49B in Q1 and $1.58B a year ago. Free cash flow was still -$496M.
- Wireless service revenue fell 4% Y/Y to $7.09B. Sprint platform postpaid churn was 2.05% vs. 2.11% in Q1 and 1.83% a year ago; prepaid churn was 4.44% vs. 4.33% in Q1 and 5.22% a year ago.
- Wireline revenue fell 18% to $746M, a decline worse than Q1's 14%. Wireline adjusted EBITDA margin declined to 4.7% from 14.2% a year ago.
- On the CC, CEO Dan Hesse confirmed Sprint is testing new plans ahead of the iPhone 6 launch and the holiday season.
- Full-year adjusted EBITDA guidance of $6.7B-$6.9B has been reiterated. However, capex guidance has been cut by ~$1B to less than $7B.
- Q2 results, PR
Jul. 30, 2014, 7:34 AM
Jul. 30, 2014, 3:42 AM
- Sprint (NYSE:S) and T-Mobile (NYSE:TMUS) are not likely to announce a merger before September, Reuters reports. The two are still preparing a detailed case for a deal to appease U.S. regulators.
- Last month it was announced that Sprint would pay around $40 per share for T-Mobile, valuing the latter at nearly $32B.
- Besides for formulating their strategy to clear regulatory scrutiny, other details such as break-up fees still have to be hammered out.
Jul. 29, 2014, 5:30 PM
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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.
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