T-Mobile begins to pad its war-chest for spectrum purchases, to issue $3 billion in notes
posted by Maxwell R. / Sep 04, 2014, 1:05 AM
Team Magenta has been preparing for the 600MHz spectrum auction, to be held next year, for quite a while, most notably, by lobbying the FCC to change the rules that might limit bidding from carriers with existing blocks of low-band spectrum, that is, below 1,000MHz.
During the last big auction in 2008, the 700MHz block, Verizon and AT&T were the big winners, securing the majorities of Block C and Block B respectively, which had the largest set of licenses, and in Verizon’s case, the most bandwidth.
It is plain to see that Verizon and AT&T have not wasted any time in making use of that spectrum, and in fact, AT&T is still building out it portion of the network. Sprint and T-Mobile were not significant bidders in those auctions, whereas, of the $20 billion raised, $16.3 billion came from AT&T and Verizon.
The two big players with the deepest pockets are sure to carry similar weight in next year’s auction, but T-Mobile is getting ready by issuing $3 billion in two different blocks of senior notes (debt) to investors this week. The first set, $1.3 billion will be redeemable in 2023 at 6%, and the next set will be $1.7 billion at 6.375%, due in 2025.
600MHz has been called “beachfront property” in the wireless sphere, better building penetration, and wider coverage characteristics, thus fewer towers required to power the network. T-Mobile may have some rules on its side, but it is still going to need to bring its wallet to buy the spectrum where it wants.
$1 billion of funds raised will be set aside to pay off existing notes that are due in 2018. The rest of the proceeds will be for “general corporate purposes, which may include capital investments and acquisition of additional spectrum.”
T-Mobile already has about $3 billion of cash on hand, and its position is looking good thanks to a healthy stock price which again, is due to solid growth and the prospect of becoming the third largest carrier in the United States. Couple that cash flow with whatever is in place next summer, other credit facilities, maybe another round of debt issues, and Team Magenta is going to be a bidder to watch in next year’s auction.
T-Mobile Agrees to Sell $1,300,000,000 6.000% Senior Notes Due 2023 and $1,700,000,000 6.375% Senior Notes Due 2025
Company Release - 09/03/2014 20:43
BELLEVUE, Wash.--(BUSINESS WIRE)-- T-Mobile US, Inc. (NYSE:TMUS) (“T-Mobile”) announced today that T-Mobile USA, Inc. (“T-Mobile USA”), a wholly-owned subsidiary, has agreed to sell $1,300,000,000 aggregate principal amount of 6.000% Senior Notes due 2023 and $1,700,000,000 aggregate principal amount of 6.375% Senior Notes due 2025 in a registered public offering. The notes offering is scheduled to close on September 5, 2014, subject to satisfaction of customary closing conditions. T-Mobile expects to use the net proceeds from this offering for general corporate purposes, which may include capital investments and acquisition of additional spectrum. T-Mobile also intends to use approximately $1,000,000,000 of the proceeds to redeem its outstanding 7.875% Senior Notes due 2018 and pay related transaction fees and expenses.
Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, and J.P. Morgan Securities LLC are the joint book-running managers for the notes offering. Barclays Capital Inc., Goldman, Sachs & Co., and RBS Securities Inc. are the co-managers for the notes offering.
The issuer has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) for the notes offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and the related prospectus supplement and other documents the issuer will file with the SEC for more complete information about the issuer and the notes offering. You may get these documents for free by visiting EDGAR on the SEC Web site at http://www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the notes offering will arrange to send you the prospectus and related prospectus supplement if you request it by contacting: Deutsche Bank Securities Inc., Attention: Prospectus Group, 60 Wall Street, New York, New York 10005-2836, by telephone at +1 (800) 503-4611 or by email at firstname.lastname@example.org; Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717, Attn: Prospectus Department, Telephone: 1-800-831-9146, Email: email@example.com; Credit Suisse Securities (USA) LLC, Attention: Max McClusky, Eleven Madison Avenue, New York, NY 10010, email: firstname.lastname@example.org; J.P. Morgan Securities LLC, 383 Madison Avenue, 3rd Floor, New York, NY 10179, Attention: Syndicate Desk, telephone: 800-245-8812; Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Barclaysprospectus@broadridge.com, (888) 603-5847; Goldman, Sachs & Co., Prospectus Department, 200 West Street, New York, NY 10282, telephone: 1-866-471-2526, facsimile: 212-902-9316 or by emailing email@example.com; or RBS Securities Inc., 600 Washington Blvd., Stamford, CT 06901, Attention: High Yield Debt Capital Markets Syndicate, telephone 1-866-884-2071.
600 MHz may be "beachfront" but it's useless until someone actually sets a band specification and makes devices for it. Band 12 is usable right now. I see them putting at least some of this cash towards picking up more 700 MHz licenses.
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