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T-Mobile purchase subject of SoftBank meeting with Deutsche Telekom

Posted: , by Alan F.

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T-Mobile purchase subject of SoftBank meeting with Deutsche Telekom
The potential purchase of T-Mobile US by Sprint has now boiled down to talks between the owners of both carriers. Sprint parent SoftBank is now meeting directly with T-Mobile parent Deutsche Telekom to work out the details of the transaction. Financing is key. Lack of it cost Dish Network the chance to purchase Sprint last year, but SoftBank has reportedly been advised by banks that it will have the financing to close the deal. SoftBank is looking to finance $20 billion.

Issues being discussed include the price SoftBank will pay for the 67% of T-Mobile owned by the German telecom firm. Also on the table is how Sprint and T-Mobile will be merged. The cultures at the two firm are not aligned. T-Mobile has become the darling of the industry with its consumer-first attitude, and there could be some problem deciding on which executives will run a combined operation.

Deutsche Telekom wants all cash for its T-Mobile stake, which has a current market value of about $26 billion. Banks involved in the financing are believed to be Goldman Sachs Group Inc., Mizuho Bank Ltd. and Credit Suisse Group AG. Any debt taken on for the transaction is expected to end up on Sprint's balance sheet. The Boards of both firms must agree to the deal along with regulators.

Another issue that needs to be negotiated is the size of any break-up fee. This is paid out in case one of the two firms decides to pull put of the deal. AT&T paid T-Mobile $3 billion in cash and handed over spectrum after deciding not to challenge the Justice Department. The agency wouldn't approve its $39 billion bid for T-Mobile in 2011. SoftBank Chairman Masayoshi Son has already said that his company owes too much debt to agree to a large break-up fee.

New Street Research analyst Jonathan Chaplin has a way that the deal could get around regulators. He believes that Dish Network, whose Chairman Charles Ergen is dying to make Dish a mobile operator, should try to make a deal with Sprint to host Dish Network's service on its pipeline. This way, the deal between Sprint and T-Mobile would spawn a new competitor in the business which would probably help the deal sail through regulators.

source: Bloomberg

24 Comments
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posted on 19 Jan 2014, 22:16 1

1. Felix_P (Posts: 1; Member since: 29 Dec 2013)


$3 or $3 billion?

I hope this won't affect current customers too much; just ordered a Nexus 5 and a T-Mo SIM...

posted on 19 Jan 2014, 22:18 7

2. E.S.1 (Posts: 294; Member since: 14 Sep 2013)


Alan....
AT&T paid T-Mobile $3 in cash and handed over spectrum .. that's not bad :)

posted on 19 Jan 2014, 22:34 2

5. reckless562 (Posts: 1011; Member since: 09 Sep 2013)


LOOOLLL damn thats a great Deal!!!!

posted on 19 Jan 2014, 22:27 3

3. ajac09 (Posts: 1367; Member since: 30 Sep 2009)


3 dollars? heck yeah I am going to buy tmobile now I got 2500 to blow right now

posted on 19 Jan 2014, 22:28 3

4. Berzerk000 (Posts: 4108; Member since: 26 Jun 2011)


Whoa, AT&T making it rain over at T-Mobile with that $3.

posted on 19 Jan 2014, 22:35 3

6. reckless562 (Posts: 1011; Member since: 09 Sep 2013)


shieaaatt ima pay $6 and buy TWO Tmobiles!!!!!!

posted on 19 Jan 2014, 22:46 1

7. Commentator (Posts: 2494; Member since: 16 Aug 2011)


I'd love to see SoftBank pit the two against each other to fight for their parent's love.

posted on 19 Jan 2014, 22:53 2

8. Landmarkcm (Posts: 465; Member since: 11 Aug 2009)


Ugh nobody wants sorry Sprint. They better not mess up all the good moves Tmobile has made & I know there not going to eliminate GSM!

posted on 19 Jan 2014, 22:59 4

9. Droid_X_Doug (Posts: 5953; Member since: 22 Dec 2010)


I don't mean to be the contrarian, but this cake isn't baked by any stretch of the imagination.

FIrst off, there is the matter of the break-up fee. DT made $3 Billion off AT&T the last go around, so they have tasted the fruits of that deal element already. SoftBank claiming poverty isn't going to play at all. They have got to pony up $9 Billion to bridge the gap between $20 Billion the banks are willing to put up and the $29 Billion market value of DT's stake. They can write a check for a $3 Billion break-up fee.

Some hair-brained scheme to lease pipeline capacity to Dish is going to be a pretty heavy lift to get the U.S. DoJ to not see it for what it is - a gimmick. Dish has nowhere near the competitive position that T-Mo has, so there is no offset to the loss of T-Mo's competitive pressure in the market.

Net-net, talk is just that. Until there is a term sheet agreed between SoftBank and DT, the meetings are not much more than parlor games fed by the media who have a vested interest.

posted on 19 Jan 2014, 23:29 2

13. tyger11 (Posts: 84; Member since: 29 Oct 2012)


T-Mobile and Sprint aren't major competitors to AT&T or Verizon right now because of their lackluster individual networks. If the two companies' spectrum were combined with LTE and VoLTE, they would then be a fierce competitor - albeit still in third place (20+ million subscribers behind #2 AT&T). The only thing competitive right now about T-Mo is its great rate structure; their coverage is pretty bad compared to AT&T & Verizon. I say this with love - I moved from Sprint to T-Mo about a year ago and am loving it - in comparison to Sprint. But they've got a long way to go to be a true competitor in many areas of the U.S. when based on technical ability. I think a combined spectrum would make them an incredible deal - as long as SoftBank ditches all of the Sprint execs in the deal. :)

posted on 19 Jan 2014, 23:18 1

10. eman99 (Posts: 238; Member since: 03 Aug 2010)


Maybe sprint customers can have some of that 4g now

posted on 19 Jan 2014, 23:27 1

12. E.S.1 (Posts: 294; Member since: 14 Sep 2013)


Where it works.... Not that good in my area.
I'm forced to use Att.

posted on 20 Jan 2014, 05:47

19. elocom (banned) (Posts: 36; Member since: 10 Jan 2014)


same here

posted on 19 Jan 2014, 23:25 2

11. Killertech2099 (Posts: 143; Member since: 28 Sep 2013)


Sprint please don't mess it up, if they end up having a break up free im just going to laugh my head off, better not take away gsm!!

posted on 19 Jan 2014, 23:47

14. kryme (Posts: 145; Member since: 24 Oct 2013)


so if they merge.. how would the gsm and cdma work...???

posted on 20 Jan 2014, 00:11

15. Commentator (Posts: 2494; Member since: 16 Aug 2011)


Why wouldn't it work? People with CDMA phones would get CDMA service, and people with GSM phones would get GSM service. S-Mobile (which I hope they change the name to) would have the widest variety of bands.

At any rate, most recent phones in the US are incorporating both CDMA and GSM.

posted on 20 Jan 2014, 13:55

22. Killertech2099 (Posts: 143; Member since: 28 Sep 2013)


Well that's true but to be honest most of the world is GSM Phones not only that it get's pricey trying to make two different devices. It's possible but i take it as a grain of salt

posted on 20 Jan 2014, 00:52 2

16. Landmarkcm (Posts: 465; Member since: 11 Aug 2009)


This was from WSJ article & let's hope if it does happen- Other ideas being debated include having T-Mobile being the one to acquire Sprint, the person said. Also unclear is what management team would run the new formed company. During a conference in Las Vegas last week, T-Mobile Chief Executive John Legere seemed to argue that it was T-Mobile that should prevail were any combination to occur.

A deal with Sprint "would provide significant scale and capability," Mr. Legere said. But, "the T-Mobile Uncarrier business, the people, the brand the attitude is here to stay. ... I think what we're doing in any scenario we will prevail."

posted on 20 Jan 2014, 00:55

17. DMDoleman (Posts: 3; Member since: 14 Dec 2012)


I Hope they buy T-Mobile honestly there no competition to AT&T OR Verizon I mean T-Mobile has got to address the coverage issue Now, not later. T-Mobile is only good if you live in a Major metro area where I work there is only 2G and i'm a former customer now i have AT&T and they have LTE coverage where i live work and travel too. I think a Sprint merger would be beneficial only because Sprint has coverage and customer base at least in my area to survive as.

posted on 20 Jan 2014, 01:38 3

18. Landmarkcm (Posts: 465; Member since: 11 Aug 2009)


Tmobile management should be in control though if it happens. Here in Vegas Sprint is still pathetic. They dont even have useable 3g service! No excuse why they shouldn't in 2014. I remember being in Disneyland even & Sprint didn't work whereas my Tmobile was fine. Tmobile is the carrier on the way up too right now not Sprint!

posted on 20 Jan 2014, 05:47

20. elocom (banned) (Posts: 36; Member since: 10 Jan 2014)


exactly

posted on 20 Jan 2014, 09:37 2

21. domfonusr (Posts: 372; Member since: 17 Jan 2014)


Regulations strangle the industry from below, and the giants strangle the industry from above... this is the sickness of our time. Although it is plain to me that the Sprint/T-Mobile merger was going to be the result one way or another, I still don't like it. All the little guys being gobbled up... Cricket by AT&T, MetroPCS by Deutsche Telekom... it was only a matter of time before #3 and #4 tied up to try to compete better with #1 and #2. There will be a lot of problems for this merger, and that might slow it down, but once they ink an agreement I would expect the FCC to approve since they are no longer beholden to the 2 GSM - 2 CDMA model of major carriers from the last decade, now that all are going LTE, and also since the resulting company would still be smaller then either AT&T or Verizon by both subscriber base and spectrum holdings. That, and the industry, and its cronies in high places, hate that T-Mobile's been rocking the boat. It cuts into everyone else's profit margin. It was only a matter of time before the powers-that-be seek to rearrange things so that most of the boat-rockin' stops.

posted on 20 Jan 2014, 16:30

23. downphoenix (Posts: 2415; Member since: 19 Jun 2010)


Indeed. AT&T and Verizon will gladly give their blessing if T-mobile and John Legere get the axe.

posted on 20 Jan 2014, 19:49

24. DnB925Art (Posts: 418; Member since: 23 May 2013)


If they do combine, I hope they keep Legere as the head of the company. He's aggressive, a fast mover, and speaks his mind. CDMA will eventually be retired as LTE is a 4G technology, but Sprint has a TON of spectrum which would benefit the combined companies immensely. I think a strong 3rd company is better than 2 weak companies going up against AT&T/Verizon.

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