DEBUG: PAGE=domain, TITLE=NelsonHall Blog,ID=1469,TEMPLATE=blog
toggle expanded view
  • NelsonHall Blog

    We publish lots of information and analyst insights on our blogs. Here you can find the aggregated posts across all NelsonHall program blogs and much more.

  • Events & Webinars

    Keep up to date regarding some of the many upcoming events that NelsonHall participates in and also runs.

    Take the opportunity to join/attend in order to meet and discover live what makes NelsonHall a leading analyst firm in the industry.


Subscribe to blogs & alerts:

manage email alerts using the form below, in order to be notified via email whenever we publish new content:

Search research content:

Access our analyst expertise:

Only NelsonHall clients who are logged in have access to our analysts and advisors for their expert advice and opinion.

To find out more about how NelsonHall's analysts and sourcing advisors can assist you with your strategy and engagements, please contact our sales department here.

Bloomberg Reports Sprint and T-Mobile U.S. Close to Merger

Bloomberg reports that Sprint and T-Mobile U.S.A. are close to a merger whereby Sprint would acquire T-Mobile U.S. for $40 a share (up 17% from the current $34), valuing the company to $31bn. Deutsche Telekom (DTAG), which holds a 67% stake in T-Mobile U.S.A., would receive 27.5% in cash, 27.5% in Sprint stock and retain a 12% stake in T-Mobile U.S.A.

T-Mobile U.S.A. had 2013 revenues of $24.4bn, had a net margin of 0%, and a net debt of $14.6bn.

If it happens, the transaction would be announced by July. It would include a break-up fee, which would range from $1bn to $3bn. The deal is conditional on regulatory approval, which may be difficult to receive.

Consolidation of the telecoms industry in the U.S. has accelerated, with AT&T bidding for DirecTV, Comcast set to acquire Time Warner Cable, Verizon having acquired Verizon Wireless, T-Mobile U.S. itself having purchased MetroPCS. AT&T had in 2011 attempted to acquire T-Mobile USA for $39bn in cash and stock. The deal faced opposition by regulatory agencies and AT&T withdrew the offer  in late 2011, and paid a break-up free to Deutsche Telekom of $3bn in cash and $1bn in assets.

Deutsche Telekom would gain in the short-term $8bn in cash with the sale of T-Mobile U.S.. The company is to face options including redistributing cash to shareholders, reducing its debt, reinvesting in its business or making M&As in Europe. There had been talks of a merger with Orange, once T-Mobile U.S.A. would be sold. There is also the reported intention to sell or IPO Deutsche Telekom’s JV with Orange in the U.K.: EE.

In all cases, DTAG is to accelerate consolidation of the telecom industry in Europe. DTAG is also likely to reconsider T-Systems. The company has regained momentum in the past 5 years, through an aggressive large IT infrastructure management  strategy and an acceleration of its transformation towards the cloud. The company has recently also accelerated divestments in geographies e.g. desk-side support in Germany, Italy or its systems integration arm in France; and reconsidering loss-making contracts.

Nevertheless, in spite of its transformation efforts, T-Systems remains loss-making, with no short-term sign of a return to profitability. DTAG is therefore likely to make a decision on T-Systems. If the T-Mobile U.S.A. deal goes through, DTAG would have the cash to reinvest organically in T-Systems, acquire to transform its service portfolio or simply aim to sell it.  Whatever the decision, the T-Mobile U.S.A. deal is to unlock the future of T-Systems. 

No comments yet.

Post a comment to this article: