Sprint To Hold Off On MetroPCS Counter-bid, At Least For now?

After it was suggested that Sprint Nextel Corp was convening their board to consider a counter offer to Deutsche Telekom’s proposed bid for MetroPCS, a new report indicates Sprint will hold off, at least for now. According to “people familiar with the situation,” Bloomberg reports Sprint’s board met last week and discussed the Detusche Telekom proposal and decided to wait for the DT filing with federal regulators before coming to a final decision.

Typically, it takes around one to two months for a company to release a filing for a proposed deal, which will show how Deutsche Telekom is structuring the deal. Sprint is said to have around 3 months to enter a bid before MetroPCS investors will vote on the proposed T-Mobile deal.

If Sprint were to follow through on any counter-offer, it would be the second time the company has made a play for MetroPCS. An earlier deal this past February saw Sprint offer $5.15 in cash per share, a deal that valued MetroPCS at around 30 percent of its then current trading price. Sprint would have valued MetroPCS at $8 billion, including debt. According to reports, Sprint’s board struck the deal down at the last-minute. Sprint’s current value is said to be around $15 billion, while MetroPCS has a market value around $4.5 billion. Were Sprint to offer a 30 percent premium on shares, based on today’s trading price that would be around $16.26 per share, or around $5.9 billion.

The Deutsche Telekom deal offered MetroPCS shareholders $1.5 billion in cash, or around $4.09 a share and 26 percent of the combined company. Deutsche Telekom has said they are ready for a counter-bid in the event of a Sprint offer and would consider better terms if necessary.

Bloomberg

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  • http://twitter.com/fightcrazy Vinny

    Hope the T-Mobile deal goes thru, T-Mobile will be able to use that Network and make it a success. LTE is coming to T-Mobile, along with their super speed HSPA+, they will be the best.

  • Whiskers

    They needed a big IOU to pull that one off since their broke right at this moment.

  • umad

    Crippled Sprint needs to focus themselves, ignore this merger and other carriers cuz there’re many dissatisfied Sprint consumers. Check out its official Sprint forum, you will be surprised.

    Desperate Sprint just buff. so pathetic. DT, just ignore them.

    • umad

      *bluffs

      *Sprint just bluffs DT

    • Adrayven

      Metroisn’t compatabile with their current towers anyway..Even though it’s CDMA, the LTE side is very different from the spectrum that Sprint currently is deploying on and would require new equipment. Seriously, they would have to do yet ANOTHER upgrade.. On top of the costs to buy Metro..

      Only other option would be to put current Metro customers on new Sprint phones, just like T-Mobile will be doing, and I can tell you, Sprints CDMA/LTE is no where near ready to impress current Metro customers who already have LTE.. They would lose most of them just like they did with Nextel..

      T-Mobile, CDMA tech aside, is spectrum wise the best fit for Metro customers.. and they will love the 3G network thats actually FASTER than Metro’s LTE(4-5mbps).. lol

      • SouthernBlackNerd

        Sprint or Tmobile combining with Metro is going to have its bumps. If you believe it will be smooth, then I have some oceanfront property in Idaho to sell you.

        But when you compare the two, Sprint will likely have an easier time integrating the two. Metro phones already roam on sprint’s network. Sprint would just have to make sure their towers cover Metro’s CDMA AWS network, then they could shut down that network freeing up that spectrum. For AWS LTE, they would just need to wait until their LTE coverage covers those areas, then stop offering AWS LTE devices, then they could easily wait until enough customers stop using it, then shut down AWS LTE. or initially make some AWS/PCS LTE devices.

        Tmobile is going to have a harder time, since only a million or so of Metro customers are using LTE devices. The majority are using CDMA devices. That is a lot of people you have to get to switch to new phones. I believe the smart decision would be make Metro a Sprint MVNO, so they could at least refarm the spectrum. At the same time, switch out Metro phones with LTE/HSPA devices. Anytime someone updates their device, they would now on Tmobile’s network.

        • UMA_Fan

          T-Mobile and Metro is a short term ‘mess’ while a Sprint and Metro would be a long term ‘mess’.

          Let’s be realistic here, if T-Mobile was going to expand in the US by any relevant means, it would have needed to get over a CDMA to GSM conversion no matter what route it took.

          T-Mobile’s plan is pretty sound. When Metro is first under their control, it will be business as usual. Metro will just be a division of T-Mobile USA. The key here is starting on Day 1 all Metro devices sold will work on T-Mobile’s network as well. These phones will have Metro PCS branding so customers won’t (need to) know they are actually buying cdma/gsm/lte phones. So this gets people off the CDMA network naturally. They’ll allow for a couple years for the majority to get off CDMA and they’ll give incentives for the remaining stragglers. Supposedly Metro’s customer base handset turnover is something like 65% a year.

          Are you sure Metro has it’s CDMA network on it’s AWS spectrum? I believe they were only doing LTE over AWS.

          Let’s say that the metro CDMA network is going through PCS spectrum which metro themselves say they are not throwing any more money into. The goal with the PCS spectrum is that as more and more people get off CDMA phones T-Mobile will refarm that spectrum to HSPA+… HSPA+ the iPhone can support. Meanwhile, on day 1, Metro’s LTE is running through AWS where they should be immediately able to combine that with T-Mobile’s own deployment. Seems to me the hardest part is shutting off CDMA as quickly as possible and getting people off cdma-only phones but if they’ve accounted and budgeted for keeping cdma on for a couple years then combined with their customer’s handset turn over it makes a lot of sense. They’ll keep CDMA on so people will buy compatible phones on their own and likely replace phones for whoever hasn’t bought phones in a few years.

          Sprint on the other hand could integrate the cdma network into their own to boost their subscriber count quite easily but then what? They could use the PCS spectrum for their LTE but as far as I know Sprint will not be doing LTE over AWS spectrum. It would seem so much more would go to waste if Sprint bought Metro and the biggest reason to do so would just be for the subscriber count.

        • SouthernBlackNerd

          A sound plan does not mean it will be smooth. You are converting 8+ million people from CDMA to GSM. That is not going to be smooth. If you do not think their will be some people who leave, then I have oceanfront property in Idaho to sell you.

          That short term mess is a lot worse than Sprint’s long term mess of having spectrum they have no use for. Tmobile needs those customers. Sprint could easily sell that spectrum to Tmobile, ATT, or sit on it until the next AWS auction and turn it into nationwide AWS. ATT/Verizon have had AWS since the auction, and they are not using it at all. No one is saying they have a mess on their hands. You are correct, but sprint would increase their lead on Tmobile. That is a pretty big reason to do something. Tmobile main reason is for customers as well.

        • UMA_Fan

          It’s not so much as T-Mobile having work to do to migrate these people off CDMA. The only phones Metro customers will be able to buy will have gsm/hspa+ on them. The key here is that T-Mobile plans to run Metro separately until the customer base naturally switches over for the most part by buying phones that they would have anyway through metro that happen to work on T-Mobile as well.

          Also, keep in mind, if you’re on Metro you’re there because of your rate plan more than any other reason. As long as T-Mobile doesn’t mess with that aspect I don’t see why an existing Metro customer will look elsewhere for a phone they need to buy anyway. Unlike Sprint/Nextel Metro customers won’t LOSE anything by buying a T-Mobile phone or a Metro branded phone that works on T-Mobile. In fact, things will work better. The major variable here is if Metro’s claimed 65% handset turn over per year is true. If so, then in two year’s time they will be set. Virtually everyone on Metro will have Tmo capable hardware. CDMA can be shut down without affecting customers and T-Mobile can replace hardware for the handful of people left with cdma only phones. Remember T-Mobile has allowed until the end of 2015 for the customer base to be truly integrated.

          The big question with Sprint acquiring Metro is if Metro shareholders see that as a BETTER situation over T-Mobile. Somehow I really don’t think so. The combined Metro/T-Mobile will be close in size to that of Sprint, have more spectrum(excluding Clearwire), and most importantly be financially sound. Not to drink the kool-aid too much, but they have a great shot at growth.

        • SouthernBlackNerd

          I do not believe a 60-65% handset turnover rate. Just seems ridiculous to me, especially since it does not match up with my evidence from Metro customers I know. If those numbers are correct though, how many are the same people getting new devices every year?
          You do not think Sprint/Cricket/MVNOs will poach customers? All Sprint/Cricket has to do is allow them to keep their devices when switching. You seem to be wasted on the kool aid, so I am not going to continue arguing with you about subscribers staying, but the facts say otherwise. I would be surprised if they have over 80% stay.

          Sprint’s stock has double since the last time they were in talks of a merger. Sprint’s stock could soar even higher if they have strong Q3 numbers. Metro’s has only risen 4.2% over the same period. Sprint has growth and their numbers( other than lack of profit) have been improving. Having growth is probably more important to investor than potential for growth. Also the fact that a combined metro/sprint is closer to the big two. Being close to Sprint is not really a good selling point. That still means you are miles away from the big two.

          I do not see why you would exclude Clearwire, since Sprint has already said it is a major part of their LTE plan. Sprint owns around 50% of the company. they do own an average of 150mhz of spectrum in the top 100 markets. Pretty big exclusion if you ask me.

          I agree that they have a great chance at growth with them combine, but they have to stop carrying midrange devices. It screams prepaid carrier instead of premium brand like the big three.

    • bleeew

      I always see people saying “its slow” or “im leaving” on the Sprint website, in its forum section.

  • Nearmsp

    Sprint is broke. The only spoiler role they can play is to push the FCC to block it. But FCC wants this to go ahead because they wanted T-mobile to become viable without having to be part of AT&T and thus reduce competition. They will rule that this does more to increase competition because it strengthens both Metro PCS and T-mobile and both complement each other and overall do not reduce competition. Wall Street money is on the merger going ahead. But the stock price indicates there is a White knight in hiding who may come up with a higher price for Metro PCS.

    • http://www.facebook.com/DSwagg09 Dion Mac

      Higher price? How can it get any higher. DT is giving the 1.5 billion dollars… oh yeah and T-Mobile #ReverseMerger

      • Nearmsp

        The deal is not closed. Shareholders at both ends have to approve it. The break fee is a low $100 million for MetroPCS. A white knight can pay that and more to PCS and they will walk away from the deal with DT.

  • Tbyrne

    Just like Hesse. Always trying to get his struggling companies name out there and in the spotlight. Oh well, nothing like free advertising. Damn Hesse!

  • Get_at_Me

    i wonder if regulators would ever let TMO and Sprint merge? Assuming all of Metro’s customer base sticks it out post merger, a combined TMO Sprint would make for 3 similarly sized national carriers.

    • UMA_Fan

      The DOJ and FCC made it pretty clear they want 4 national carriers.

      After the regulatory headache that was att/t-mobile I think DT would play it safe when it comes to mergers within the US. They must have had their doubts even with the att merger to negotiate such a high break up fee.

      Also, Sprint is on the verge of bankruptcy. I don’t see how Sprint could get to a point where they could make money again. What could they do different besides raising their plan prices?

  • BigMixxx

    http://www.extremetech.com/electronics/137442-t-mobile-and-metropcs-a-match-in-lte-heaven

    Good read on the whole thing.

    A couple of things to point out:

    1) Sprint CANNOT afford it. IF they did make a move on this company, the operations cost would break Sprint

    2) Sprint already has, what 3, MVNO’s (Leap, Virgin and the Government Phone).

    3) it’s not a good match for sprint who is still hurting from the nextel acquisition.

  • Richard Yarrell

    Very smart to back off Sprint. Tmobile gots this and knows what they need to do. Focus on your Lte network it needs much help especially here in New York City.

  • Unperrodesuerte

    Could be moot if the Softbank offer to acquire 2/3 of Sprint is legit: http://www.businessweek.com/news/2012-10-11/softbank-is-in-talks-to-buy-sprint-nextel-stake-nikkei-says

  • umad

    Good news for Sprint and T-Mo guys,

    Japan’s Softbank will buy crippled Sprint for just cheap $12 billion!

    Source: http://www.engadget.com/2012/10/11/softbank-acquire-sprint-nextel/

    Good news for DT. :D

  • Guest

    Maybe Metro can roll out Wi-Fi Calling which will help a lot of users. Metro is network is not everywhere. I think this is one of the best feature of T-mobile.

  • Randall Lind

    Metro user will love Wi-Fi calling. It will help many users in areas where they can’t connect to a network. I also use it inside buildings and at home. I think this is the best feature yes it use mins but, if you have an unlimited plan then it doesn’t matter.

  • JimInChicago

    Just announced that Sprint has received a takeover offer from an Asia-based cell co.