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T-Mobile Addresses Possible Acquisitions or Partnerships

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Oct. 12 2015, Published 3:13 p.m. ET

T-Mobile on acquisitions and partnerships

In this series, we’ll look at some wireless updates as well as those from T-Mobile (TMUS) that were discussed at the Deutsche Bank Leveraged Finance Conference held on September 30, 2015.

During the conference, J. Braxton Carter, T-Mobile’s chief financial officer, mentioned earlier merger and acquisition talks with companies such as Sprint (S), Dish Network (DISH), and France’s telecom (telecommunication) company Iliad SA.

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On the pricing side, Carter said, “In a situation like Iliad, again very flattering, but I mean if you want to roll a wheelbarrow full of cash at $55 a share and say, hey, we’ll pay you this for your company today, of course, we would do that.”

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He also talked about the possible industries from which an acquirer or partner of T-Mobile may come. He said, “Having a true ubiquitous mobile platform can be a huge differentiator for tech, a huge differentiator for content providers, specifically cable or satellite, and we think that the strategic opportunity for us is going to grow significantly over the next several years.”

About T-Mobile

As of October 8, 2015, T-Mobile was trading at a forward PE (price-to-earnings) multiple of ~18.7x. T-Mobile’s closing price on the previous day was $40.37. Meanwhile, Verizon (VZ) and AT&T (T) were trading at forward PE multiples of ~11x and ~12x, respectively.

T-Mobile was the third-largest US wireless carrier by total subscribers at the end of 2Q15. The two largest US wireless telecom players were Verizon and AT&T. Sprint (S) was the smallest among the top four US wireless carriers at the end of the quarter.

Instead of taking direct exposure to T-Mobile’s stock, you may consider a diversified exposure to the telecom company by investing in the iShares Russell 3000 ETF (IWV). The ETF had ~0.05% of its holdings in the US wireless telecom company at the end of August 2015.

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