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Report: T-Mobile USA targeted for private equity buyout

Posted: , by Alan F.

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Report: T-Mobile USA targeted for private equity buyout
After being unable to close on its sale to AT&T last year thanks to the Justice Department, T-Mobile USA might be in play again after all. Bloomberg reports that former telecommunications executive Sol Trujillo has approached private equity firms like the Blackstone Group and KKR in an effort to generate interest in a buy-out of all or part of T-Mobile USA. Trujillo, the former head of U.S. West, Orange SA and Telstra Corp. has so far has found no interest in an acquisition of the nation's fourth largest carrier.

"(Most buyers) would find T-Mobile’s spectrum far more compelling than its customer base."-Christopher Watts, analyst Atlantic Equities
The private equity firms who have heard the pitch are said to be skeptical because of the size and cost of financing it. Atlantic Equities analyst Christopher Watts puts a value of $30 billion on the unit and says that its mobile phone frequencies are the most valuable part of the company. T-Mobile has sought to cut-back its spending by closing call-centers and jobs. Last year's $39 billion offer from AT&T to buy the carrier was rejected by U.S. regulators and T-Mobile owner Deutsche Telekom has decided to lower its exposure to the States.

Sol Trujillo

Sol Trujillo

Meanwhile, Trujillo also has tried to drum up support for a leveraged buyout of Sprint. Private equity firms like KKR and Blackstone favor LBO's which uses leverage to purchase a company for as little money down as possible, financing the balance from money raised from selling off non-essential components and using cash flow from operations. The major part of an LBO is getting a source of cheap financing and according to Tom Taulli, an M&A consultant, financing is currently cheap. But that doesn't mean that a deal will get done. Taulli points out that there haven't been many $10 billion plus LBOs lately.

While Deitsche Telekom refused to comment on the story, the company is allegedly open to a sale of all or part of its U.S assets including T-Mobile, and would prefer to invest in its European operations. A person with inside knowledge says that Deutsche Telekom's board has not discussed a sale of T-Mobile to any private equity firm.

source: Bloomberg

12 Comments
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posted on 11 Aug 2012, 19:21 1

1. PhoneArenaUser (Posts: 5461; Member since: 05 Aug 2011)


Sol Trujillo use cunning smile. :D

posted on 11 Aug 2012, 19:34

2. phonearenasucks (banned) (Posts: 1; Member since: 11 Aug 2012)


Whenever I hear trujillo, I remember "In the time of butterflies" both the movie and the book. Nice movie sad ending. RIP Minerva, Maria, Patria !

posted on 11 Aug 2012, 19:40

3. rockstarlive (Posts: 307; Member since: 19 Oct 2011)


This might actually work....

posted on 11 Aug 2012, 20:54

4. snowgator (Posts: 3188; Member since: 19 Jan 2011)


Wait a minute.... Aren't private equity firms supposed to be evil, money suction hatchet companies?

Huh... Maybe we have been harsh....

posted on 12 Aug 2012, 10:40

5. richardyarrell2011 (banned) (Posts: 510; Member since: 16 Mar 2011)


This ain't getting no place...

posted on 12 Aug 2012, 12:39 1

6. som (Posts: 768; Member since: 10 Nov 2009)


T-Mobile is trying to chase away it customers with Galaxy S3 $200 down and $20/month for 20 month on the phone. It is very outrageous offered by T-Mobile.

posted on 12 Aug 2012, 13:13 3

7. remixfa (Posts: 13902; Member since: 19 Dec 2008)


horribly outrageous!! especially when you pair it with that super expensive $60 unlimited Talk text and web plan!!!

how dare they!

lol..

you do realize thats the best deal going on all the major carriers right?? lol

posted on 12 Aug 2012, 15:29

8. Jphones (Posts: 233; Member since: 10 Feb 2012)


just stick to not commenting

posted on 12 Aug 2012, 18:12

9. johnbftl (Posts: 169; Member since: 09 Jun 2012)


This would be WAY worse than the AT&T purchase option. If a private equity company bought T-Mobile, they would more than likely sell off the spectrum to the highest bidders, so Verizon and AT&T, and dump off the customer base regionally to companies like C-Spire and U.S. Cellular leaving T-Mobile customers with less network coverage, slower data and lower customer satisfaction. This will be worse than the Alltel debacle. Anyone that was switched from Alltel to Verizon or AT&T or worked for one of those companies during the acquisitions knows what I'm taking about. It was hell for everyone. At least let Sprint take them over if they are intent on selling. At least they could handle the merger, I hope. Maybe they learned their lesson with Nextel.

posted on 12 Aug 2012, 21:26 1

10. lsutigers (Posts: 698; Member since: 08 Mar 2009)


I don't think Sprint will consider T-Mobile anytime soon, they have bigger fish to fry, so to speak. They are in the middle of a multi-year, multi-billion dollar network re-build. Once Network Vision is complete, then maybe, Sprint can worry about acquiring T-Mobile, but even then, all they would want is the spectrum and customers which would lead to a lot of layoffs in the consolidation process and Sprint is not in desperate need of spectrum right now. Sprint's latest report shows healthy gains, they lost money mainly because of the iDEN decommissioning but they are adding customers and selling iPhones which is more than T-Mobile can say at this time. I really hope T-Mobile stays afloat and DT invests the money to upgrade to LTE as planned. They just need to give customers what they want and that is fast data and better coverage, exactly what Sprint is doing and it seems to be working for them.

posted on 13 Aug 2012, 12:28

11. Jeradiah3 (Posts: 962; Member since: 11 Feb 2010)


ALL OF THIS wouldve been avoided if AT&T bought out Tmobile in the first place!!! Theyre right, the spectrum is worth more than the customer base SOOOOOO why not send them to the only company that is similar when it comes to technology???

The US Justice Dept got pressured by Sprint and other "smaller" companies to step in and avoid this merger...................NOW they look stupid by liatening to them in the first place. Dan Hesse should be more concerned about trying to make a profit with the iPhone instead whinning about sometihng that has nothing to do with him

posted on 14 Aug 2012, 12:43

13. zekes (Posts: 206; Member since: 14 Aug 2012)


no dont do it tmobile u have the best plans out the big 4

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