As MetroPCS Share Price Drops, Will Other Suitors Reconsider Making Competing Bids?

Since the announcement of the MetroPCS merger with T-Mobile USA, the company’s shares have dropped 27 percent. The decline in share price could potentially leave the door open for other suitors, including Sprint and Dish Network, though both companies seem unlikely to make bids. Given that Sprint has just announced their intent to buy 100% of Clearwire and Dish continues its search for a national carrier to partner with, MetroPCS shareholders appear “stuck” with T-Mobile USA.

The question then becomes, whether or not T-Mobile is getting a steal? T-Mobile’s October deal with Metro will see the carrier buy shares between $9.27 and $16, depending on the multiple applied. While Softbank CEO Masayoshi Son would love to see Sprint purchase Metro further strengthening Sprint’s place in the US market, it would interfere with the company’s efforts to pick up the rest of Clearwire. It seems unlikely that the FCC and DOJ would approve a three-way deal and leave T-Mobile out in the cold.

Dish Network has already made at least one offer for Metro when they offered $11 per share back in August. However, as Dish just received permission from the FCC to use its spectrum holdings for wireless service, they’ve made their intent to join up with an existing carrier clear. Sprint’s move with Softbank leaves them in an unlikely position to partner with Dish, and MetroPCS will give them an existing footprint, but not a terribly large one. It’s possible that Dish could partner with a joint T-Mobile, MetroPCS which would give them an existing national footprint. As Deutsche Telekom pledges another $4.7 billion in T-Mobile’s network in 2013, Dish could use less of its own capital to build out a nationwide LTE network.

In the end, MetroPCS shareholders may find that a deal with T-Mobile is their only option and should take their cash dividend and hope that the deal materializes into a rejuvenated fourth-place carrier. With the promise of Apple “products” launching next year, 2013 already looks bright for T-Mobile. Circling back around to Metro’s sagging share price and whether or not that signals fear that even combined with T-Mobile, the joint company will be still be in a distant fourth place.

Wall Street Journal

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  • BigMixxx

    Metro and T is still a good deal. T gets ready made prepaid customers biting to get to a better swath of devices…the defection rate will be REALLY LOW and customers will pay no more than what they are paying now for devices. all for about a billion bucks. ….Sprint paid 29 BILLION for nextel, it what seems to be one of the worst moves in history. (btw, Verizon paid 24 billion for alltel — 13 million customers and had to give up some of them, Cingular paid 41 BILLION for att wireless and gave up nothing)

    They bought synergy in the networks, with a viable LTE solution that is more compatible with their current network than Sprint…for dirt cheap…

    (Can you tell I hate sprint)

    • nycplayboy78

      BigMixx…Waddup man…Where the Hell have you been at?

      :)

      • BigMixxx

        Crib, chillin, eating cheetos, watching Andy Griffith….

        Working like the folks Moses freed in Egypt…..

    • SouthernBlackNerd

      Your numbers are pretty off. Tmobile gave Metro 1.5 billion in cash, which is lower than those other deals, HOWEVER, they also gave metro 26% of the new company formed by the merger. If we value tmobile at the ATT price tag of 39 billion, then that is an extra 10.14 billion given to Metro for a total of 11.64 Billion dollar price tag. It is still less than the others, but Nextel/Alltel/ATTwireless are all bigger/more valuable carriers than Metro.

      The Sprint Nextel was a bad merger, but only because they tried to merger synergies instead of poaching Nextel for the spectrum, which was the only valuable thing about them.

      The Verizon Alltel deal shot Verizon up as coverage king. Alltel did not have a ton of customers, but they had a nice size of rural coverage. the ATT/Cingular deal was similar to Verizon/Alltel.

      Only 1 million or so of Tmobile customers are using LTE devices, which means a vast majority are still on their CDMA network alone. Sprint will have an easier time swallowing up those customers compared to Tmobile having to make these customers switch to LTE/HSPA devices. Tmobile still has a ways away, and this deal is not going to be easy peasy lemon squeezy like many want it to be.

      • BigMixxx

        I wouldn’t liken ANYTHING to the T mobile purchase. That was such an overbid…There is no precedence set for it.

        TECHNICALLY, T is not really out of anything. 1 for 2 reverse stock split, buys up most of it’s own shareholders. AND even at holding 26% of the remaining company, shareholders really gain 1 or 2 percentage points in value.

        So truly, it would be closer to the verizon/alltel deal, when alltel went private for an UNUSUALLY LARGE amount of cash. Which in the end — proved very well for Verizon.

        I’m trying to find those million folks on the T with LTE devices (assuming you are saying LTE capable). CDMA is more than likely history in the US, in it’s current form…

        So it’s a good deal for metro and an even better deal for T. AND if sprint had their way, they would have just jacked up another good company…

        • SouthernBlackNerd

          I meant Metro has around 1 million LTE devices, not Tmobile. CDMA is on a dead end, but lets not act like it is already dead. It is going to take years for CDMA to finally die out. I doubt Verizon or Sprint will start refarming their spectrum prior to 2015. You have to get a majority of people off the network before you can shut it down.

          I never said it was a bad deal. I think it is a very good deal. This deal will allow them to beat ATT’s LTE network and potentially compete with Sprintwire/Verizon for Best LTE network.

          I think I understand why you hate sprint now. you were a former nextel customers, who is mad at sprint for how the nextel fiasco was handled. The problem with that thought is that Nextel was dead before sprint bought them. Basically after Sprint bought nextel, they were forced to pay for the rebranding on the 800mhz spectrum, because nextel was interfering with public safety. Sprint had to pay to free up the G-block and H-block in the PCS band, plus they had to pay for ALL reallocation costs for the 800Mhz band. That storm was coming no matter who bought them, but people blame sprint. iDEN was a dead technology.

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

          lol @ sprintwire

        • BigMixxx

          Ha! I was never a Sprint customer. SprintWire! That’s a good one…I think they wasted sooo much money, they blew plenty of opportunities to convert the network.

          Yup, CDMA is going. Verizon says 2021, so probably a few years before, then, they will stop the major support for applications spanning accross that network.

  • http://www.justingrady.com/ Lars O’Hanlain

    Depending in timelines I could see a partnership with Dish if both (three) agree in pricing, and think overall it would be a good fit. There’d be better cross selling marketing opportunities as well. For Telekom, it would make their US market exit a bit faster as well.

    • BigMixxx

      That is some serious thinking, and some good wishing, but the revenue model has to follow where everyone is profitable.

      Depending on how much cash dish is sitting on, and how the new T mobile will be financially structured, it would make sense…

    • Todd

      I was thinking the same thing, maybe they’re all waiting for the for this merger to go through first. But I wouldn’t be surprised at all if a Dish and New TMO merger might happen late next year.

  • http://twitter.com/YepiimGS_Blanco Jay J. Blanco

    T-Mobile realy needs this deal to make a better network and of corse customers.

  • UMA_Fan

    I’m wondering if the ultimate end game to all this is HOW Sprint/T-Mobile will hook up.

    Sprint has hinted many times it’s interested in partnering with T-Mobile. Maybe DT only wants this to happen if they are the ones in control of the combined entity. Remember prior to the at&t deal the rumored Sprint/Tmo hook up would have DT owning 50% of the combined entity. That’s huge considering Tmo’s size. Basically if you’re Deutcshe Telekom and you see a good chance to over take Sprint, you put Sprint on hold and then renegotiate in a few years.