Less than two years after a failed deal to sell T-Mobile USA to AT&T, parent company Deutsche Telekom AG has finalized a deal to merge T-Mobile USA with MetroPCS Communications Inc. The deal, approved by MetroPCS shareholders last week, is set to close on May 1, and it has already been granted approval by both the Justice Department and the Federal Communications Commission.
The T-Mobile/MetroPCS deal combines the fourth and fifth largest wireless carriers in the United States. The combined entity will have approximately 40 million U.S. subscribers.
The deal comes after what has been a tough period for Deutsche Telekom. The proposed merger with rival AT&T fell apart after expressions of concern from regulators that the combined entity would decrease competition in the U.S. mobile wireless market and ultimately harm consumers. In addition, from 2009 to 2012, T-Mobile lost about 13% of its contract subscriber base.
With the MetroPCS deal finally closed, T-Mobile can move forward and push to become a true rival to the largest nationwide wireless carriers. Helping this along is the spectrum holdings that T-Mobile will acquire as part of the deal. With a finite amount of spectrum available to deliver wireless services to consumers, carriers like T-Mobile need all they can get to compete with the likes of AT&T and Verizon Wireless.
Added to that, T-Mobile has recently added the iPhone. This, and its adoption of wireless plans that do not require long-term contracts (they eliminate subsidies for the phones, however), are things that the carrier hopes will set it apart from its rivals.
Telephone and Data Systems Inc., parent company of TDS Telecommunications Corp., has announced an agreement to acquire the assets of Baja Broadband LLC for $267.5 million.
Baja Broadband is a full-service communications company, providing video, high-speed broadband and voice services to customers in Colorado, New Mexico, Texas and Utah. Headquartered in Alamogordo, New Mexico, the company generated revenues of $82.4 million in 2012, and has approximately 285 employees.
“Baja Broadband is a natural extension of TDS’ existing business, with significant potential to deliver increased returns over time,” said David A. Wittwer, president and CEO of TDS Telecom. “Our strategy is to leverage our expertise and existing platform and technologies to accelerate growth in underserved, high-potential markets. We plan to build on Baja’s solid customer base and upgraded network to increase penetration and revenues with new services and products and outstanding customer experiences.” Read more
Clearwire announced that it will draw $80 million in financing under the terms of its agreements with SprintNextel Corp., rejecting the bid from satellite TV provider DISH Network Corp. Announced in December, Sprint agreed to pay Clearwire $2.2 billion and provide the company with up to $800 million in financing. The deal will provide financing to Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share. Sprint already owns a 51% stake in Clearwire, but is trying to buy the remaining shares.
In January DISH put in a bid for Clearwire, offering $5.15 billion. According to Clearwire, a Special Committee of Clearwire’s board of directors engaged in discussions with DISH concerning its proposal, and with Sprint over the last two months, and the Special Committee intends to continue such discussions. The company states that it has not made any determination as to whether to take any future draws under the Sprint Financing Agreements and will “pursue the course of action that it believes is in the best interests of Clearwire’s non-Sprint Class A stockholders.”
Comcast has announced plans to purchase General Electric’s (GE) 49% stake in NBCUniversal for $16.7 billion. In addition, NBCUniversal will pay GE an additional $1.4 billion for the properties at 30 Rockefeller Plaza and CNBC’s headquarters in Englewood Cliffs, NJ.
“Our decision to acquire GE’s ownership is driven by our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders,” said Brian L. Roberts, Comcast Corporation Chairman and CEO. “We believe we are in a strong and unique position to continue to grow and build value in our combined company.”
Prior plans had called for Comcast to purchase the remainder of NBCUniversal from GE in July 2014. Comcast’s accelerated purchase of GE’s share of NBCUniversal will not require any additional government review as the FCC has already given its approval.
The acquisition, which was funded by $11.4 billion of cash on hand, $4.0 billion of unsecured notes to be issued to GE, $2.0 billion of Comcast borrowings and $725 million of preferred stock to be issued to GE, is expected to close by the end of March.
The two dominant wireless players are keeping spectrum in the family. Verizon Wireless and AT&T Inc. announced that AT&T has agreed to acquire 39 lower 700 MHz B-block licenses from Verizon for $1.9 billion.
The transaction also includes the transfer of AWS licenses in five western U.S. markets from AT&T to Verizon Wireless. The 700 MHz spectrum being acquired by AT&T covers 42 million people in 18 states. Read more
On January 8, Dish Network presented an offer outbidding Sprint for all outstanding shares of Clearwire. DISH offered to acquire all of Clearwire’s common stock for $3.30 per share, but as announced on December 17, 2012, Clearwire previously entered into a definitive agreement with Sprint Nextel Corp. for Sprint to acquire the approximately 50% stake in Clearwire it does not already own for $2.97 per share.
The Special Committee of the Clearwire Board of Directors determined that its fiduciary duties require it to engage with Dish in connection with the Dish proposal, but Clearwire’s ability to enter into strategic transactions is limited by its current contractual arrangements, including the Sprint Agreement. Read more
Blackfoot Telecommunications Group announced last week that it will acquire Fremont Telecom Co. and Fretel Communications, LLC, the Idaho properties of mid-size (and publicly traded) FairPoint Communications. Various reports tout the expanded broadband access that customers will enjoy, and the debt reduction FairPoint will be able to achieve after the reportedly $30 million transaction closes.
Fremont and Fretel collectively serve approximately 5,400 customers; Blackfoot serves approximately 20,000 customers in western Montana and Idaho; FairPoint serves 1.9 million customers across 18 states.
According to a FairPoint press release, the Idaho properties “contribute approximately $8 million in revenue, approximately $5 million in EBITDA, with capital expenditures of approximately $1 million.” From all accounts, that seems pretty good. And, considering that FairPoint emerged from bankruptcy barely two years ago, the divesture of these assets may indicate some contours of FairPoint’s future business plans, and where they intend to focus their primary energies. Read more