A new Bloomberg report has been filed today in which it cites its own sources confirming talks between T-Mobile US parent Deutsche Telekom and Softbank regarding the purchase of T-Mobile USA by the Japanese conglomerate.
The report goes on to elaborate how the two companies are exploring the best way to structure the purchase deal, such as how much cash and stock SoftBank will pay for T-Mobile, as well as how to integrate the two companies and what break-up fees might be assigned, if any, should the deal fall through. Deutsche Telekom wants cash for the company, SoftBank wants to use both cash and stock.
T-Mobile’s current market value is about $26 billion factoring out its debt level and SoftBank already has assurances from several banks that are willing finance the deal. However, Softbank’s Son is reluctant to agree to break-up fees as SoftBank has already taken on a substantial amount of debt to buy Sprint through previous bank loans and taking on Sprint’s current debt level.
Deustche Telekom also recently moved its 67% stake in the current T-Mobile US into a new Dutch holding company, and has denied the move had anything to do with a planned sale of the company, instead claiming that the move was part of an already planned internal restructuring related to more favorable tax rates in The Netherlands.
Both companies hope to structure the deal so that it meets as little resistance as possible from federal regulators, who are sure to scrutinize the deal closely following the previous purchase attempt of T-Mobile by AT&T, as well as keeping in mind previous statements made by FCC chair Tom Wheeler on maintaining four active carriers in the current market to preserve competition. The idea behind Softbank buying and integrating T-Mobile stems from the belief that by combining both Sprint and T-Mobile, they will stand a better chance of competing against the largest US carriers in AT&T and Verizon.
Bloomberg’s report also specifically mentions that no Sprint management or executives are involved in the current discussions. This development also follows Sprint management recently being approached by two banks that are willing to finance the T-Mobile purchase for $50 billion, though that deal is reported to be separate from the current discussions and the aforementioned financing value factors in a $31 billion dollar market valuation for T-Mobile US along with refinancing its current $20 billion in debt.
