As Opponents Score Wins, Analyst Says T-Mobile/MetroPCS Deal Won’t Complete Under Current Conditions


Opposition to T-Mobile’s proposed merger with MetroPCS gained traction last week as two separate shareholder advisory firms came out against the deal. Now, P. Schoenfeld Asset Management, one of the loudest opponents of the deal is using the swing momentum by scheduling a webcast for April 4th to explain its position.

Two of the most highly respected corporate governance advisory firms have now come out against the merger,” P. Schoenfeld Asset Management said in a statement. “It is time for PCS management to re-examine the terms of the proposed transaction and other alternatives available to the company, such as remaining as a stand-alone business.”

The decisions of Institutional Shareholder Services and Glass Lewis & Co advised that Metro shareholders were not getting the best possible deal. The last of the big 3 firms, Egan-Jones Proxy services came out in favor of the deal the same day as the ISS report. While advisory firms have had waning influence in recent years, it would be foolish to overlook the impact their decisions may have on undecided voters. Jonathan Chaplin, an analyst at New Street Research says Deutsche Telekom must now sweeten the deal or risk losing the vote.

“DT has to sweeten…[they] would be crazy to let it go to a vote. There’s no way they will win. They don’t have enough votes to get a deal done.”

For its part, Metro’s board continues to emphasize the benefits the merger has for its investors base as the merger offers:

“…Both immediate and long-term compelling economic value” to its investors. “The combined company will be the leading value carrier in the U.S. wireless marketplace and will be able to compete more effectively against the other national wireless competitors,” it said in a letter to stockholders. It will also be in “a better position to participate in future industry growth and consolidation.”

Chaplin suggested that after some recent meetings with Metro shareholders that it would be difficult to seal the deal as it’s now structured. “And then the ISS report pretty much clinched it.” said Chaplin

Even as two advisory firms suggest against the deal, Metro may have few options if the T-Mobile deal falls apart. No other competing bids have surfaced  and going at it alone is a possibility for Metro, but not one the company’s board believes is the best route. The combined carrier with 42.3 million customers would present a stronger challenge to AT&T and Verizon than both companies do independently.

Will all of that weigh on the minds of Deutsche Telekom as they look at the decisions of the two advisory firms in the days leading up to the April 12th vote? We’ll find out soon enough.


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  • Antdog

    April fools???

    • I wish, but the Bloomberg story is from last night.

      • jonathan3579

        Why isn’t DT saying anything on any of this?

        • Paul

          They are probably seeing this as a way to still release T-Mobile USA into the wild.

  • Mike

    Here we go again. If the TMO/Metro deal does not close TMO subscribers are going to face more turbulence and schizophrenic marketing plans.

  • nd5

    Brilliant! So these “advisory firms” are going to try to beat up DT for a few pennies now. If this deal does not go through, my crystal ball tells me that MetroPCS will eventually end up in a different deal that isn’t even this good. So I’m betting that a “victory” now for these hedge funds will be a hollow one.

    • SouthernBlackNerd

      Both companies are facing subscriber losses.

      Both companies will struggle without each other

      AtT sprint and Verizon are prepping to deploy their lte advanced networks.

      Verizon is deploying AWS this year. They could deploy 20×20 in some markets. Most markets will get an extra 10×10 on top of their 10×10 700mhz. AT&T is a couple years back, but they could copy Verizon in 2014 with their WCS. Sprint could deploy 20mhz TD-lte, which has similar speed to 20×20 lte. Clearwire already has 1000+ TD-Lte towers up and running.

      Tmobile/metro need each other or they wil fall behind. I feel like we are seeing the end of regional players. They do not have enough spectrum to compete. They may switch to MVNOS.

  • Mirad77

    On a serious note though, as much as I want this deal to go well and bring Tmo to a better place in the industry the new CEO is giving me a bad impulse of the future. Every time I see this guy, he seems to have the word WRONG written on his face. Dunno, maybe its just me…….

    • galaxymaniac

      The new CEO’s job is to trim the company and spin it off so that DT can exit the USA. Everything else is just a means to the ends.

      • galaxydude

        Are you sure about a spin off.?

      • Mirad77

        I think you put it in better words than I could.

    • vrm

      Its just you- stop staring at the mirror.

      • Mirad77

        You should do some research before saying thing yo don’t know. Hint John Legere.

  • JB

    I wonder how much more they have to sweeten the deal for it to be acceptable? I personally think DT and Metro will meet somewhere in the middle and get it done.

    • galaxydude

      I agree they will sweeten the deal and it will go through.

  • galaxymaniac

    Snake oil greedy Legere must have a significant bonus tied to this merger, just like he made hay while the rest of Globe was burning .. the fat cats from MetroPCS’ board and T-mobile hatched this scheme so that bonuses and golden handshakes could kick in, and they can spend the rest of their lives drinking Pina Coladas in the Carribean while the NewCo struggles. All you T-mobile employees, don’t for a second trust your new CEO, he talks the talk and walks the walk, but end of the day all he really cares about is himself. He will cut everything to shreds until he gets his money.

    • Dion Mac

      Now this deal as been in the making long before Legere became CEO. Also Global was already in bankruptcy when he took over and he ran it 10 years after. But whatever

      • UMA_Fan

        Who needs to form strong opinions around facts anymore?

    • vrm

      no one is snakier and greedier than hedge fund managers. No one is more crooked than ‘anal’cysts and ‘advisory’ firms.

    • Excited for the change

      Regardless of your opinion of Legere, he knows what he is doing. Before he came to Tmobile he was the CEO at global crossing which, I don’t know if you know the background on that company but I do, because my dad works for them(now level 3), they filed chapter 11 bankruptcy and legere pulled them out of bankruptcy. My dad also never loved his job more working for legere, and hates his job now that his gone. Legere will turn this company around because that’s what he does. I trust my CEO, he hasn’t given me any reason to second guess my job security for a second.

  • james w

    I guess cutting our commission, removing our phone discounts, and not getting our yearly pay increases are not enough. John Legere will be replaced as the other dildos who tried to sell this dumpster fire were over the years. This company is being gutted from top to bottom and next year maybe they will eliminate all commission as they believe thats what customers want.

    • Pick A Name

      Why haven’t you quit yet? Are your skills in any field aside from “selling mobile phones” that poor?

    • Hogpistol

      Your commission hasn’t been cut. If you’re making less money now than you did earlier then you need to look in the mirror.

  • If this deal doesn’t go through, does one of the companies get a payout like the botched At&t deal?

    • galaxydude

      Yes there are payouts. I am
      Not sure about what amounts.

      • superg05

        150 MILLION

        • MMakoto

          so that’s about 10% from the $1.5B offered, is this the normal amount one needs to pay in case it fails? i wonder what effect t-mo will have if this merger fails though??

        • TechHog

          T-Mobile would be the one getting the money, so I guess they’d add it to the money their using for network improvements

        • MMakoto

          why would t-mo get the money when they failed to acquire? shouldn’t it be metro pcs be getting the money like how att paid $3B to t-mo?

        • thepanttherlady

          It goes both ways. Whoever breaks the deal has to pay the other a break up fee.

        • Wow lol I don’t think Metro can afford to lose any more

      • thepanttherlady

        $250 million if we back out, $150 million if they back out.

  • t-mobile just needs to quit. Fight this fight by themselves. Get someone in place who can and is willing to lead the fight and stop with all of these doomed mergers.

  • philly8

    So Dave what about specifics? For example, Why is this not a good deal? and second what is a better solution? We know metro can’t do it alone because of spectrum so the firms dont understand wireless.

    • Adrayven

      The irony is Metro PCS has no other viable options. No other offers on the table for a buyout. No other options for spectrum. They’ve already shown that they’re starting to shed customers, they’ve been negative for subscribers the last two quarters.

      Their balance sheet is green but it’s only a matter time.

      • Adrayven

        The advisory firms are simply getting greedy risking losing the whole deal in order to get more money. It’s quite sad.

      • kalel33

        T-mobile’s been shedding customers for 10 quarters straight.

  • Dakota

    If this fails,it will look like a bride jilted yet again

  • S. Ali

    Screw Metro, take the money and invest it into building out the current network and let Metro split into irrelevance.

    • TechHog

      The entire purpose of the buyout is for more spectrum to expand with.

  • Jack

    f**k share holders this deal need to happen love you tmobile

  • CPPCrispy

    If it does not go through, there might be some alternative strategy. They could pool their network resources (spectrum, actual networks) and forge out a plan were both can use each others networks and spectrum to expand coverage. Metro PCS could allow the use of its spectrum and T-Mobile could use it to upgrade and expand their network and vice-versa. Both would have access to this network and would share in the expenses (running expenses, upgrades, expansions). Something like this could also lead to a merger later on since both would rely on each other to provide services and a breakup would be catastrophic for both.

    • Nick

      Maybe something like Bell and Telus do in Canada except a lot less monopolistic?

  • Paul

    “It is time for PCS management to re-examine the terms…such as remaining as a stand-alone business.”
    I mean you can continue to be known as Ghetto PCS…just sayin’.

  • thepanttherlady

    I wonder if DT hadn’t announced last year that they were prepared to offer better terms if we’d be going through this now.

  • Chris

    People in this thread think that they’re entitled to bonuses. Do you know what “Bonus” is?




    A payment or gift added to what is usual or expected, in particular.

    It means – there are times when it wouldn’t come. that’s why it’s called bonus.

    This is ridiculous. Live within the limits of your base salary. Stop being and idiot who uses their credit card so much and expects “bonuses” to pay it off.

    • OnlineRefugee

      Well that’s pretty harsh, true, but harsh.

      Actually, there’s a second meaning of “bonus” when talking about employees.

      “Bonus” = Additional compensation based on an individual’s or Company’s better than expected performance, or meeting goals set beforehand, usually on an annual basis.

      My ex GF learned last December her employer was NOT giving bonuses to anyone because the Company’s 2012 performance was dismal. She did not get the usual $60,000 bonus, her big shot VP boss did not get a $1.2 million bonus.

      While I would not slap the poster as hard as you did, if I was working for T-Mobile I would not expect a bonus and would consider myself lucky to even have a job. Anyone still working for them should make plans to leave rather than waiting for the axe to swing.

      I sure as heck would not continue working for a company that is looking to reduce overhead by eliminating the biggest drain on profits, employees. (Besides, IMO stores staffed with salespeople, that’s fast becoming an outdated way to do business. So went Circuit City, and soon Best Buy, so will go ALL “cell phone stores.”

  • tommest

    This is getting annoying. I swear I see this 10 times a month. This makes me piss off , stop spamming

    • thepanttherlady

      Who are you referring to?

  • Richard Yarrell

    Regardless of all this huffing and puffing and no houses being blown down. The deal will take place as expected April 12.

    • NYCTheBronx

      I will be happy to see the merger go through. Take that greedy dirt bag Metro PCS shareholders!

  • UMA_Fan

    Interesting in that Metro’s letter to shareholders advising them to vote for the merger they heavily imply that if the terms of the deal were to be renegotiated with Metro’s current value they would potentially own a lot less than the 26% stake they are getting in the company:

    If T-Mobile were contributed with $4 billion lower debt (i.e. $4 billion higher equity), per P. Schoenfeld Asset Management LP’s (“PSAM”) previously filed presentation, then the resulting MetroPCS stockholders’ ownership in the combined company would need to be adjusted to reduce MetroPCSstockholders’ ownership from 26% to 12%7 – 15%8.

    A less favorable ownership stake of between 17%7-24%8 would result after appropriate adjustments for $1.5 billion MetroPCS cash reserved for spectrum and $1.5 billion cash payment as disclosed in the MetroPCS amended definitive proxy statement.

    The stand-alone MetroPCS value per share (after deducting $1.5 billion in cash reserved for the acquisition of spectrum) represents an approximately 22% decline vs. the current MetroPCS share price.9

    Even PSAM notes in its previously filed presentation that it may be appropriate to adjust for the $1.5 billion of spectrum in a relative DCF analysis.

    Given T-Mobile’s much higher asset value, DT could only facilitate MetroPCS’ stockholders’ 26% stake by contributing T-Mobile with sufficient leverage to create the intended ownership split. The 26% stake will allow MetroPCS’ stockholders to participate meaningfully in the expected substantial upside of the combined company resulting from the significant projected synergies.