Deutsche Telekom Denies Reports They Will “Sweeten” MetroPCS Merger Terms


In response to a Reuters report this morning (that I was in the middle of typing up as this new report came out) Deutsche Telekom denies that they will sweeten the deal with MetroPCS.

“We are not considering changing the terms of the proposed merger,” DT spokesman Philipp Kornstaedt told FierceWireless.

The Reuters report had cited two unnamed sources that DT is considering sweetening the deal to help get approval from Metro shareholders. The report had come amidst rumors that DT was concerned the release of two advisory reports last week that suggested the deal was bad for Metro shareholders would sway said shareholders to vote against the deal. One advisory firm, Egan-Jones Proxy Services, came out in favor of the transaction. The deal has passed through all the necessary regulatory reviews and awaits final approval from MetroPCS shareholders to complete.

Under the deal, which will have close to $19 billion in net debt, will include a $15 billion dollar loan from Deutsche Telekom which will own 74% of the combined company. MetroPCS shareholders would get $4.06 a share in cash plus stock equal to the remainder 26% of the company. As of this morning, MetroPCS Communications Inc was trading at $11.20 a share.

Analysts see a different picture as they believe DT will not lose the opportunity:

“Deutsche Telekom has a problem: It’s probably going to be tough to get the votes it needs,” Keith Moore, an event-driven strategist at MKM Partners LLC, said in a telephone interview. “It’s highly unlikely that they do nothing and lose the opportunity, especially if you think back to how long they’ve been working to extricate themselves of T-Mobile.”

“The ISS report was the final straw,” Jonathan Chaplin, a New York-based analyst at New Street Research, said in a phone interview. It pushed the likelihood that management will get enough votes to complete the deal “from unlikely to highly unlikely territory,” he said. “If they adjust the terms enough to win support, it will still be a good deal for Deutsche Telekom,” Chaplin said, citing future costs savings — from items such as shutting down one of the networks run by T-Mobile and MetroPCS — that have a net present value of $6.5 billion.

Is Deutsche Telekom willing to let the deal slide or are Kornstaedt’s comments just a public front while a decision is reached behind closed doors. The comment makes sense given that any remarks leading the market to believe DT would up the deal would push the MetroPCS share price even higher further complicating terms.

This deal is beginning to look like anything but a sure thing.

Bloomberg; Fierce Wireless via Reuters

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  • Richard Yarrell

    The deal will go down as expected period. Their won’t be NO NEED to sweeten the deal.

    • jonathan3579

      Your use of the English language is disgusting. If you think this is clear, cut, and dry then your eyesight is apparently more jaded than I imagined. As much as I hate to admit it, this deal isn’t going as smoothly as anyone hoped and has very little chance of passing without any further action.

      • Go to hell NERD

        • jonathan3579

          Wow Dick… You needed a new username to say that?

  • rfgenerator

    Smoke and Mirrors. I’d wager a few bucks that DT will indeed “sweeten the pot”. DT can’t risk the chance of this falling apart at the finish line.

  • Lakers

    Good, because the deal is already sweet enough for both sides.

  • TMoFan

    DT needs a public tmo and will not let this thing fall apart. It’s too much of a risk to leave it as it is.

  • thepanttherlady

    Last year they were prepared to make a better offer should someone else make a bid for MetroPCS. Now they want to stand their ground?

    • You can not let analysts decide if you are going to change your deal. These analysts are usually motivated by greed and usually have something to gain. If Metro doesn’t take this deal they will surely go out of business. They are without a doubt the worst Carrier in the US, T-Mobile should stand their ground.

      • sino8r

        Never heard of “geedy” analysts lol! Maybe stupid, inaccurate ones but not sure about greed?

        • Adrayven

          Greedy because they either have stocks invested or they are being paid to provide an opinion. I’d be willing to bet one or both of the ones that were negative were asked to analyze this deal based on the current majority stockholders request.

        • sino8r

          I know what you mean… Maybe he should have said biased and not greedy. Makes more sense that way. Just strange choice of words IMO.

    • Fraydog

      That debt will make it harder for TMUS to build out their coverage and continue to upgrade to the newest technologies. Now if DT blows up the deal for nothing… it’s on them!

      Edit- I replied to the wrong person, but come think of it, I like the idea of PSAM trying to sweeten the pot.

      • thepanttherlady

        I’m going to assume you responded to the wrong person because I said nothing about anyone being greedy.

        • Fraydog

          It’s better for T-Mobile customers in the future to not be paying to a company that is drowning in debt. TMUS needs the flexibility to make the right choices on a network engineering level. Read the PSAM report, it’s very clear about their rationale.

  • Will

    Hoorah for Metro PCS. Cause those greedy T-Mobile execs to pay through the nose.

    • John

      Why are you still here?

  • mreveryphone

    Ahh, the old “Bait and Switch”

  • troysyx

    I really hope that Metro shareholders vote for the merger. It does benefit everyone (consumers and owners). If they dont take the deal, i honestly see the stock going even lower, then they will have to sell to someone for an even lower price. Take what you can get Metro

  • OcalaFlGuy

    I am wondering if any commentors so far actually watched the PSM presentation this morning on opposition to the merger. I am no business expert but what I did understand clearly did not make it a good deal for Metro. It Did appear to me that PSM was being conservative with It’s figures and did a pretty good job of showing Metro was using “Voodoo Accounting”. And, from what I’ve seen publicly, Metro can’t really refute PSM and the vote nay analysts with black and white hard facts. Hmmm. I would not bet a dime on it passing as it is currently set up.

    • jojo

      do you have a link to this presentation?

  • M42

    T-Mobile and their trash talking management are too inept to make a deal like this work. It will fail and then some carrier like Sprint or even US Cellular, who both have compatible networks, and need the consumer base will pick them up.

    • voodo

      troll stikes!

    • Fraydog

      There are legitimate criticisms to make of DT in this process… but that’s not it.

  • Durandal_1707

    Really though, what’s the worst-case scenario if this doesn’t go through? T-Mobile seems to be doing surprisingly well right now on their own. They’ve apparently managed to turn their churn problem around, they’ve introduced some awesome new no-contract plans, and they’re about to get the iPhone. Does T-Mobile really even need Metro?

    • Drew Vallejo

      Realistically from what I understand, it is a purchase of spectrum that T-mobile is really looking for. The purchase would help out T-mobile in the long run as they upgrade the network.

    • SouthernBlackNerd

      Their churn problem is still real. They had some real nice subscriber growth, but that was all non branded prepaid. They still lost 199,000 branded postpaid accounts. Better than the previous two qtrs of 500,000+, but still not turned around.

      Second, They could fall behind in terms of LTE. Without Metro, very few places will be getting LTE 20×20, while the Big 3 will likely be able to deploy 20 x 20 almost nationwide.

  • James

    I honestly see no future for Metro PCs! Wherever they got service. Almost all other carriers have it better than them. They claim to have “4G LTE” but that’s bull cause the speeds range from 1mbps-5mbps, even T-Mobile 3G beats that! I know all of this because I tried Metro, sprint, and T-Mobile. And I have to say T-Mobile is the best of those 3! I am never switching to another carrier now that LTE is comming and on no-contract!

  • mike

    I see no reason for TMO to sweet the pot. If the Metro folks back out of the deal the is that ever looming large payout the metro would have to make for not following through. TMO might just be able to pick up the towers and customers off Metro at a fire sale price as Metro closes its doors. It would be very foolish for the investors of Metro to vote down this offer.

  • ceegii63

    GREEDY people are just GREEDY

    the METRO PCS Shareholders just want more money, thats it

    • Mike

      We would all want more money but the Metro share holders have to understand that they agreed to pay $150 million to tmo if they back out of the deal. Clearly the share holders are not thinking rationally if they walk away. Yes TMO would get additional spectrum and towers which would help them improve the network but if the deal falls through TMO remains whole and stands to gain $150 million to live another day. This might not be true for Metro.

      • me

        Not really. If Metro backs out it will be mainly because they feel they can get a better deal from someone else. Whether its Sprint/Softbank or another interested buyer, they could easily include the $150m buyout as part of the terms of another acquisition.

  • Verizonthunder

    Crossing my finger’s all goes through

  • nogoodnamesleft90210

    DT is just posturing. The only question is whether they’ll sweeten the deal before the vote, or wait until it’s voted down to make an enhanced offer. There’s no way they’re going to let another deal fall through. T-Mobile basically lost an entire year of growth & development during the failed AT&T takeover, and will suffer a similar set back if the MetroPCS deal goes bust. They’ve already laid off a significant amount of their corporate work force in the past month in anticipation of the merger.

  • TBN27

    Let the deal die. I am for it but if there is gonna be serious opposition against it, then T-mobile should just go it alone.

  • John

    I wouldn’t be surprised if we saw a release from DT stating that the main reason that they are offering to buy out metro is that metro will soon be feeling a major spectrum crunch, and as such may be forced out of business. Such a statement could drive down the stocks for metro a little more, and therefore make the deal more appealing.

  • UMA_Fan

    Sprint was the only realistic buyer but they are tied up with Clearwire and Softbank.

    They might get more money with a Dish Network bid but that’s not a combined company that’s likely positioned for growth. No one would be jumping to switch to a Metro PCS/Dish anytime soon even if hey had access to Dish’s spectrum to build advanced LTE on.

    The combined Metro/T-Mobile deal is the most likely positioned to grow. T-Mobile just needs a little kick to be successful again.