T-Mobile to Remain Independent for Now

Sprint backs out of its plan to acquire T-Mobile, while T-Mobile turns down Iliad's unsolicited offer.

Aug 6, 2014 at 2:00PM

That was an exciting six months, wasn't it? News first broke that Sprint (NYSE:S) wanted to acquire T-Mobile (NASDAQ:TMUS) back in December. At the time, the rumored deal could have been valued at over $20 billion.

But any potential tie-up between the No. 3 and No. 4 wireless carriers was always bound to face a steep uphill battle with regulators. Regulators blocked AT&T's attempt to scoop up T-Mobile in 2011, after all.

After months of consideration and speculation, it looks like Sprint is throwing in the towel.

Doomed from the get-go

Regulators have been uncharacteristically vocal in expressing concerns about the rumored deal, perhaps as a preemptive attempt to warn Sprint that such a merger would be doomed from the get-go. It's a tough sell to argue that an industry consolidating from four major players to three would benefit competition, but that's exactly what Softbank Chairman Masayoshi Son came to Washington to do lobby for this year, promising a "price war" if the deal was allowed to go through.

Reports had indicated that Sprint would have been on the hook for a breakup fee of $1 billion to $2 billion if the deal was officially proposed and subsequently blocked. T-Mobile certainly enjoyed the consolation fees it took home in the form of cash and spectrum after AT&T failed to acquire the company. That ended up enabling the disruptive carrier, and Sprint likely didn't want to risk it.

A SoftBank executive told Reuters that regulatory opposition was stronger than expected, but that a deal in the future remains a possibility if the regulatory environment changes. Sprint also replaced Dan Hesse as CEO. Marcelo Claure will become CEO and try his hand at a turnaround.

Shares of both domestic carriers fell on the news, with Sprint taking it hardest.

Surprise!

France's Iliad surprised investors with an unsolicited offer last week. Iliad offered $33 per share, hoping to grab a majority stake in the Un-carrier. That price tag was less than the $40 per share that Sprint was supposedly preparing to offer, but Iliad noted that its proposal would face less regulatory scrutiny (and therefore entail less risk) since the two companies do not operate in the same market.

T-Mobile majority owner Deutsche Telekom said, "Thanks, but no thanks." The $15 billion offer was too low, and Iliad would have had to stretch itself to come up with all the necessary funds anyway. That's especially true if a bidding war with Sprint had emerged.

Well, with Sprint officially bowing out of discussions, Iliad may now have an upper hand. Despite being rebuffed initially, The Wall Street Journal reports that Iliad is still planning to push forward. Iliad no longer has a competing suitor, which will afford it time and flexibility to consider its options carefully. For now, Iliad is standing pat with its $33 per share offer, but it could potentially sweeten the deal later on down the road.

It ain't over yet

That's not to say that a bidding war still can't emerge. DISH Network has been unsuccessfully trying to hook up with a wireless carrier for years. DISH continues to sit on billions of dollars worth of unused spectrum. Dish Chairman Charlie Ergen teased that Sprint pulling out "increased some optionality" for DISH. Ergen still wants to expand DISH's business, and it wouldn't be surprising if DISH ends up considering a T-Mobile offer in the foreseeable future.

For now, T-Mobile looks set to remain independent as it has turned down one offer and another has backed out. Everyone wants a piece of the Un-carrier thanks to the success of its aggressive tactics over the past 18 months.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers