Money managers see T-Mobile as long-term takeover target

An asset management firm predicts further consolidation among the four major U.S. carriers, and sees T-Mobile US as the most likely acquisition target. According to Gabelli & Co., potential acquirers of T-Mobile US could include Comcast, Charter Communications/Liberty Media and Dish Network. Longer term, the Gabelli analysts think SoftBank and Sprint could revisit SoftBank cofounder Masayoshi Son’s ambition to acquire T-Mobile US. SoftBank said this week it will raise almost $8 billion in cash by selling part of its stake in China’s Alibaba.
Although Gabelli is not expecting anyone to launch a bid for T-Mobile US in the near future, the firm thinks the market in time will consolidate, and sees the carrier as “essentially the only way for a domestic or foreign company to enter the U.S. wireless market in a meaningful way.” T-Mobile US is 65% owned by Germany’s Deutsche Telekom.
AT&T tried to buy the carrier for $39 billion in 2011, but the U.S. Justice Department blocked the deal in an effort to maintain a competitive marketplace. It’s unlikely anyone could have predicted just how competitive the market would become in the years following the failed deal, or that T-Mobile US would be the primary disruptor. Under the leadership of CEO John Legere, the “un-carrier” has moved the industry away from long-term contracts and subsidized devices, and has won customers by pairing creative content offerings with a steadily improving network.
This week, Counterpoint Research said the carrier sold more smartphones than any other carrier during the first quarter, and the telecommunications report from the American Customer Satisfaction Index found consumers are happier with T-Mobile US than with any other carrier.
According to Gabelli, T-Mobile US’ management “believes there is a strong standalone business case for T-Mobile, but would be open to merger and acquisition opportunities that would create value in excess of [a] standalone scenario.”
The carrier also told Gabelli it plans to open about 400 new retail stores and will focus on markets in which it currently has very low market share. The company also said with the addition of the 700 megahertz spectrum it is buying from AT&T in Chicago, its low-band footprint will eventually cover roughly 83% of the U.S. population.