Sprint Nextel (NYSE:S, news, filings) may not take the DT/MetroPCS deal lying down. Reports this morning say that the company is preparing a counter bid for MetroPCS. DT is said to be prepared for such an eventuality. But regardless, we may have an auction on our hands.
It’s not as if Sprint couldn’t have bid for MetroPCS before, but DT’s bold move seems to have shifted their perception of the competitive environment. There aren’t many inorganic moves available to Sprint that make a dent in the scale differential between themselves and Verizon and AT&T. And inorganic moves have dominated that race.
There are reasons why Sprint might make a better buyer for MetroPCS. Their 3G networks are both CDMA, and therefore easier to integrate, for instance. But DT has motivation on its side, which counts for a lot. Following the collapse of the AT&T deal, they gained a breakup fee but lost a year competitively. Now with a new CEO and an LTE buildout plan, plus the resources of DT behind them to take it forward.
Of course, there have been recurring rumors of a Sprint/T-Mobile tie up. If T-Mobile can make a case for MetroPCS, it could make a case for combining with Sprint in a similar manner. Perhaps the endgame here will see all three team up somehow.
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Categories: Mergers and Acquisitions · Wireless
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I suspect I’m among countless others that are thinking that a Sprint counter offer is a tactically sound move.
Worst case scenario they require T-Mobile to spend more money to purchase MetroPCS. Best case scenario, they get MetroPCS.
There’s a $250m “Recommendation Change” (breakup) charge to MetroPCS if the MetroPCS board selects a different offer.
This could get fun.
Agreed.