Perfect T-Mobile partner needs to have spectrum and customers, makes Iliad buyout unlikely

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There’s no two ways about it: T-Mobile is an attractive company right now. It’s disrupting the wireless industry, expanding its network and taking customers from its competitors at a rate of 3:1*, and of all 4 major carriers, it has the best public image and appeal. What’s more, Deutsche Telekom wants to get rid. Not because T-Mobile is unsuccessful, but because it needs to focus its efforts on competing in Europe. But what are the options? Iliad has bid, and is frantically begging for money from a variety of sources to help raise its offer. Sadly for the French telecoms giant, it’s unlikely to be successful.

Analysts from Jefferies met with T-Mo’s investor-relations team yesterday and came away with a distinct impression that the magenta-flavored carrier is looking for a partner with a U.S. customer base and U.S. spectrum. Iliad doesn’t have either of those things.

“In this respect, and in our view, a deal with Iliad appears less likely given the lack of domestic spectrum and customers,” they added. “Dish also does not necessarily fully satisfy the criteria, but offers a more compelling opportunity given its spectrum holdings, and video customer base.”

One thing is clear, Iliad isn’t the only interested company, and the interest isn’t likely to end anytime. As reported by Fierce Wireless:

T-Mobile CEO John Legere said at an investor conference last week that he knows the company is a potential takeover target but that T-Mobile has options. “We take the interest in T-Mobile–which isn’t just them [Iliad], it’s many different companies–as flattering,” he said. “I think that will continue.”

“What we are doing, we are constantly looking at multiple paths,” Legere continued. “One is a very strong, vibrant, stand-alone business. We also look at the various trends in the industry and ways that we could do things inorganically.”

One company that’s always speculated as an option is Dish. The TV company has both spectrum and customers. But very little of the speculation comes from sources with any knowledge. They’re just “educated” guesses.

Exactly what happens from here on out is unclear. T-Mobile has plans to overtake Sprint as the #3 and will then set its sights on AT&T. Although we have a feeling that target might take a little more time than overtaking Sprint will.

Source: Fierce Wireless

*Porting ratio of 3:1. For as many customers who leave T-Mobile for one of the other three carriers, 3 customers come the other way. This doesn’t mean T-Mobile is bringing in 3 times as many new subscribers as its competition.

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  • Paul Garrison

    Spectrum would be great, but T-mobile just needs a partner or parent company with money or access to money.

    • Thomas Su

      Deutsche Telecomm does…

      • Paul Garrison

        Yeah, but they are spending it in Europe to solidify their home turf. Maybe I should have included focus with that money, although I thought that was implied.

    • James Shaggy

      I would love to see them as a stand alone company but having a parent company with deep pockets would thats willing to invest is a much more sound idea. Maybe US Cellular and Dish would make a good Combo to buy out most if not all of DT. As long as they leave Legere as the ceo and the rest of the team alone, as well as the whole uncarrier idea. Basically Dish cant muscle in to change things for the worst and USCC has to understand that TMUS is making head way.
      From a spectrum prespective, this would add low band (band 5, 12, and tdd 700 (blocks D&E from Dish) as well as additonal aws and pcs.) Thus the network would get a much needed boost in the mid-west and the carolinas. The network would look something like HSPA+ AWS and PCS and LTE 700 5*5, 850 5*5, PCS 15*15, AWS 15*15

      • dtam

        google?

        • James Shaggy

          If google invested in T-Mobile then they should wholly buy out i-wirless, cspire, and us cellular. There are a few other licenses they can go after. And dish should definitely at the very lease become a partner because of their pcs/aws spectrum. More capacity wouldnt hurt.

  • James

    DT are blind. They can see the success T-Mobile is bringing. I get that they want to focus on Europe but why do that when there isn’t as many potential customers as they are here in the States. And if in the future they happen to sell T-Mobile US they are selling one of their largest customer base, T-Mobile roughly counts for 25% of all DT Subscribers. T-Mobile has room to growth where as in Europe is isn’t really much. In my opinion I think they are making a huge mistake otherwise they wouldn’t be a lot of companies trying to acquire T-Mobile.

    • matt

      T-Mobile in Europe is like Verizon In USA

      • Jarrodpd

        I wouldn’t make that comparison, verizon is over priced and has areas with troubled service. Where as T-Mobile uk is affordable and has great service.

        • MagicMiguel

          This is true.

    • Stefan Naumowicz

      Competing in the USA will always be an uphill battle for them, meanwhile in Europe they are on top of the market with an established customer base and strong network. Competitive pressure in Europe is on the rise, largely with Vodafone’s huge cash infusion from being bought out by Verizon. DT is just trying to answer.

  • UMA_Fan

    The best partner option I would like to see is tmobile partner with a cable company on a market by market basis for an auto authenticate wifi calling solution.

    They can software rig the phones to auto connect to a hidden wifi connection emitted by all the deployed routers out there for tmobile customers only.

    If they can’t get the cable companies to bite I wonder if it would make financial sense for tmobile to pay people to use their home internet as an auto authenticate wifi calling spot in places they can’t deploy normal cellular reception anytime soon.

    • Oleg O.

      That would be cool, but T-Mobile’s problem is data in rural areas. WiFi calling doesn’t help there.

      • Cellphone Chris

        Of course it does! Wifi would provide calls as well as data. Cable companies already have infrastructure in place with plenty capacity.

        • Oleg O.

          Of course wifi works in one spot. But T-Mobile’s problem is the mobile network.

        • Cellphone Chris

          It can actually work in multiple spots. For example, Comcast has started to deploy modem/router combos that emit a 2nd wifi access point named “xfinity wifi”. Any existing customer can use this access point from their devices on any Comcast modem within range. After entering my credentials, I can access this wifi connection from any compatible modem in locations nationwide. It basically turns the existing customer base into a mobile network, providing access when away from home. I would not need to use this access point from my own house; I’d stay on my own secured network.

          This has already helped me in the rare situation that I didn’t have T-Mobile coverage. I must admit that I live in the Northeast, where T-Mobile and Comcast both have a large footprint. I tend to be covered by one or another at all times.

        • Oleg O.

          Hmm that’s interesting. So potentially, I could drive in the rural areas where Sprint and Verizon have 3/4G, and I could be piggybacking off other people’s Comcast? It would be similar to everyone having a microcell.
          Too bad those monopolists have a deal with Verizon.

        • Cellphone Chris

          Exactly!

          The Comcast deal with Verizon does have a time period attached, so it isn’t out of the question. Buying T-Mobile is still unlikely, less for that reason and more due to the fact that Comcast is already in the approval process for the purchase of Time Warner. Assuming that they are successful, the chances of them acquiring a wireless provider are slim to none.

          The good news is that those of us who happen to subscribe to both companies can already use those wifi hotspots to augment coverage. The amount of available wifi from your ISP or other sources will grow exponentially over time.

        • UMA_Fan

          Why couldn’t they acquire a cellular provider if they wanted to? Very few regulatory issues since cable and wireless are two different businesses.

        • Cellphone Chris

          They are and they aren’t. The benefits would essentially allow converged internet services and coverage. Unlike a deal with Dish, I’d tend to think they’d both be considered ISP’s. Just speculating. I think Comcast would be the only cable company with the clout and footprint to pull it off, but it’d be a very bold move. They’re already the largest cable company and buying the 2nd largest (Time Warner Cable). I’d suspect that it may be wise for them to take one thing at a time. Remember, it’s been 5 years since they bought NBCUniversal. They have plenty of work ahead – I doubt T-Mobile will still be available to purchase once they have gotten everything organized.

        • guest

          wouldn’t wifi in rural areas be difficult with absence of homes/buildings/networks

        • Cellphone Chris

          Not if the cable companies figured out how to broadcast wifi at strategic points along their network. I’m speculating, but pretty sure it could be done from the pole in places where customers are spread far apart.

    • AK

      The cable companies already have a cooperative Cable WiFi network with over 250,000 hotspots nationwide. AT&T only offers about 29,000 hotspots but you can pay extra to access their partner hotspots (which include Cable WiFi).

      The cable companies sold AWS-1 spectrum they collectively held (through a consortium called SpectrumCo) to Verizon Wireless. As a part of that deal, VZW will sell/bundle cable services in markets/territories that do not have FIOS as well as the cable companies will sell/bundle VZW service in non-FIOS areas.

      There may not be a play with the cable companies for T-Mobile. As a T-Mobile customer, you are better off going with a cable company for home internet vs Uverse or FIOS so you can have free access to the 250K hotspots.

      Of course you can also get free wifi at Starbucks and other places. Google is working on a program where small and medium size businesses can purchase wifi routers from their partner which then Google could manage and configure. This takes away management responsibilities from the businesses and they also get analytics and targeted advertising. For consumers, once you login through a Google managed hotspot (which utilizes Hotspot 2.0 tech), you do not need to login and re-authenticate at other Google managed hotpots. T-Mobile and other customers could benefit from this.

  • William Burr Winans

    Why not let T-Mobile US do its thing and DT do their own business? Seriously I am tired of hearing this over and over again!

    • maximus1901

      Bc DT is an owner 67% and it selling to someone wouldn’t stop Legere from doing his own thing.

      • archerian

        How would it not stop JL? The majority shareholder can make CEO changes. They aren’t motivated by uncarrier but sustained profitability.

  • vrm

    That pretty much rules out selling – the only companies that satisfy all these criteria are forbidden by FCC/DOJ from buying t-mobile. I don’t think US cellular can make an offer t-mobile can’t refuse.

    Of course, it doesn’t rule out t-mobile buying other companies as it did with metroPCS.

    It is also interesting that t-mobile is making such statements in the first place. I was given to believe that DT wants to sell and its entirely up to them to accept an offer they like and move on but this suggests that t-mobile’s management has a greater say in that transaction than we were led to believe.

    • Brandon Dean

      I think the better options is for tmobile to buy a smaller company and become independent in the process. If they bought carrier number 5, they would buttress their spectrum holdings, subscriber base, and become a much closer number 3 carrier.

  • Jay J. Blanco

    U.S. Cellular would be a good partner. They need some help bad. Roaming agreemenet between tmobile and U.S. Cellular would be cheaper then AT&Ts once the network is built

    • J Cav the Great

      I could see this as well..

    • Jared Wolfe

      I was thinking the same thing.

    • Chris

      Roaming agreement? Why not just buy US Cellular completely?

      • randian

        I think they’ve been resisting buyout offers.

      • Jay J. Blanco

        It’s cheaper to do roaming agreement

  • NSWorldwide

    Dish was voted the worst large company to work for in America. They are notorious for providing few vacation days and requiring employees to work very long hours. Moreover, their corporate culture is just “mean”. I cannot see how the two cultures of TMo and Dish would mesh amicably.

    • Zayn

      I could see it happening , as long as John Legere is CEO of the merged company.

      • Krali

        They wouldn’t merge…They would have the same relationship DT and TMUS have now. Dish would be the parent company, and T-Mobile would be separate with its own CEO. As long as it’s John Legere, I’m content.

    • random person

      I work for a dish call center, doing tech support, been there for over 3 years. I love it. best job I have ever had, 40 hours a week, 2 weeks of vacation, 1 week paid sick time. break every 2 hours. I have nothing I could complain about. (extremely lenient attendance policy, I could miss half a day almost once a week without any issues)

  • outrageous.hypnotist

    vrm is right on the money. This article is dumb. FCC/DOJ won’t allow anyone with US customers and spectrum to buy them. In fact, Illiad is more likely than any company with US customers.

    • Stefan Naumowicz

      Yes they would, just not any of the other 3 nationwide carriers.

  • Oms

    If DT just wants to just take the money and leave to Europe, then why would they care if the purchaser has a customer base and spectrum?

    • James Shaggy

      Because T-Mobile US are the ones trying to find a better parent.

      • Oms

        I see your point, but let’s say DT got a good offer but TMUS didn’t like it, DT is the majority owner so they would win and just take the money.

        • James Shaggy

          No. The board would have to agree on what ever deal is presented.

        • VG

          Which board? The T-Mobile US board? I don’t think they have any say as to what an owner of the stock wants to do. Once the 18-month lockup period expires in November, DT can even start selling its shares of TMUS on the stock market, in whole or in part.

        • maanshu

          They are looking at numbers and betting on a great winter sales. I don’t think they would like to cash on it so soon. People see T-Mobile as an opportunity. It’s getting the hype because of the unlimited plan.

        • Chris

          They are publicly traded now. The so called “Board of Directors” would have to give their approval.

    • Stefan Naumowicz

      Because they have most likely won’t be able to completely rid themselves of ownership in one shot. A buyer would be offering a cash and stock offer, so there would still be an interest in the company’s future after a sale.

  • TechHog

    That pretty much seals Dish as the buyer. *sigh* I’ll need to upgrade my phone as soon as I can so I can do it before contracts return.

    • J Cav the Great

      Going back to contracts would suck, but if they still offered all those offers, worldwide texting, Jump! Unlimited Music Streaming..then that would be something I can overlook.

    • Brandon Dean

      I doubt the contracts would come back if they were bought. Because that is part of what is attracting customers from other carriers in the first place. Price, no contracts, and the other various perks that the company continues to add.

    • Stefan Naumowicz

      The other carriers have all stated that the contract/phone subsidy model was no longer sustainable. That’s why they are all pushing their EIP plans over contracts now. Besides, in either scenario the outcome is the same. A customer either pays an inflated monthly rate that has a hidden phone payment (contract) or the same monthly rate split into a service plan and phone EIP. If a customer leaves, they either pay an ETF (contract) or finish off their remaining EIP balance. What’s really the difference if you’re on one or the other?

      • Krali

        EIP is optional. If I bring my own device to a contract, I STILL have to pay to get out of it. I ALWAYS buy my devices in full and cash. I don’t have an EIP, I only pay for service. If I want to leave, I just can. No fees, no bull shit. If I had a contract (something I’ve never had, and never will have) I wouldn’t be able to do that…So, how can you even think there isn’t a difference…?

  • randian

    Dish has spectrum, but I don’t see how it’s usable as mobile phone spectrum. There is also the problem of getting the phone manufacturers to enable that spectrum in their radios. No band 12 in the iPhone 6, for example. Dish’s spectrum is unique, so only their phones would need special radios for it. Volume might be too low for the manufacturers to bite.

    • KeepU

      Dish’s low frequencies will build out Magenta’s rural coverage and the high frequency will become fixed wireless home services from the same towers.

      • randian

        Which manufacturer will support said low frequencies? It’s useless without phone support. A smaller carrier won’t have the influence with Apple or Samsung that AT&T and Verizon have.

        • KeepU

          It would be a great opportunity for sony and/or LG to carve a bigger chunk out of the US market if apple and samsung are slow to support it. For better or worse, rural customers are often used to having fewer options.
          Edit:
          HTC, and some of the Chinese manufacturers are also good candidates.

  • rondo

    wonder how much would it be for tmobile usa to buy themselves from DT and remain a sole company

    • J Cav the Great

      This.⬆⬆⬆⬆⬆

    • BlackJu

      To what or whose benefit? How does this help them acquire spectrum, build towers, etc?

    • superg05

      i would at least like them to buy back atleast 5 percent so they would be in control of the companies direction

    • Krali

      Sorry but that doesn’t help tmo. It just reduces their available funds to continue doing what they’re currently doing.

  • archerian

    “It has the best public image and appeal” – from who’s perspective?

    • J Cav the Great

      Consumers who are not very well familiar with T-Mobile and are seeing the commercials. I maxed out my refer-a-friend credits..that’s $25 x 10 = $250 T-Mobile credit. While many of us in the tech world may know T-Mobile’s weaknesses. Consumers are willing to take a chance on Magenta.

      • Brandon Dean

        A good portion of consumers don’t find the weaknesses to be that much of a problem. Since t-mobile tends to be fine in more populated parts of the country.

        • Roger McCalman

          I have to agree with you. Many people in more populated areas do a cost analysis and stay with T-mobile. I am one of those people!

    • Stefan Naumowicz

      The market as a whole, considering the porting ratio is 4:1 in tmobiles favor and they have been out pacing the other carriers in growth for about 2 years straight now.

  • daniel

    I think if T-Mo could get their hands on a good amount if low band spectrum (at least 20mhz nation wide) they could continue on their own. If they bought US Cellular, C-Spire, and other regional carriers, that would be awesome too.

  • tmorep

    Come on Vodafone, they already have m2m customers in the US

    • Chris

      But Vodafone owns some Verizon stakes? Or did Verizon completely bought Vodafone out?

      • Sean

        Verizon bought out Vodafone in February.

  • Mike

    My hope is that TMO continues to work on network improvements and development. The recent move to wifi calling could distract TMO from aggressively completing the network build out.

    • SeriouslyOldNews

      It is not recent! It has been on Tmobs devices for a long time! Whats new and innovative is iJoke decided to state it was “new and improved” And the goats ate it up. :P