Report: T-Mobile USA targeted for private equity buyout

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.

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

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12 Comments

1. PhoneArenaUser

Posts: 5498; Member since: Aug 05, 2011

Sol Trujillo use cunning smile. :D

2. phonearenasucks

Posts: 1; Member since: Aug 11, 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 !

3. rockstarlive

Posts: 307; Member since: Oct 19, 2011

This might actually work....

4. snowgator

Posts: 3614; Member since: Jan 19, 2011

Wait a minute.... Aren't private equity firms supposed to be evil, money suction hatchet companies? Huh... Maybe we have been harsh....

5. richardyarrell2011

Posts: 510; Member since: Mar 16, 2011

This ain't getting no place...

6. som

Posts: 768; Member since: Nov 10, 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.

7. remixfa

Posts: 14605; Member since: Dec 19, 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

8. Jphones

Posts: 250; Member since: Feb 10, 2012

just stick to not commenting

9. johnbftl

Posts: 283; Member since: Jun 09, 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.

10. lsutigers

Posts: 832; Member since: Mar 08, 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.

11. Jeradiah3

Posts: 1149; Member since: Feb 11, 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

13. zekes

Posts: 230; Member since: Aug 14, 2012

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

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