Acquisition of Metro PCS by Deutsche Telekom AG

Topics: Deutsche Telekom, T-Mobile, Corporate governance Pages: 3 (705 words) Published: December 14, 2013
Acquisition of Metro PCS by Deutsche Telekom AG (T-Mobile US, Inc.) On Oct 3, 2012 acquisition of MetroPCS Communications Inc’s 74% stake by T-Mobile US, Inc, a subsidiary of Deutsche Telekom AG by $29 Billion provides MetroPCS' stockholders with an immediate $1.5 billion aggregate cash payment as well as an approximate 26% ownership stake in the combined company. It allows all MetroPCS stockholders to participate in the expected significant equity upside of the combined company. Our valuation exercise leads to $3.04 per share of MetroPCS whereas it has been acquired at S4.05 prior to the proposed reverse stock split which justifies the premium paid projected cost synergies of $6-7 billion as net present value and annual run-rate cost synergies projected at $1.2-1.5 billion after an integration period.

Value Addition for Deutsche Telekom AG (T-Mobile US, Inc.)

On May 1, 2013, Deutsche Telekom AG (T-Mobile US, Inc.) completed the combination of T-Mobile USA, Inc. and MetroPCS Communications, Inc., uniting two wireless innovators with one common vision; to bring wireless consumers exciting new choices while delivering an exceptional experience. The Board of Directors of the combined company will have 11 members, including two directors of MetroPCS who will continue with the combined company. Tim Höttges, currently Deputy Chief Executive Officer and Chief Financial Officer of Deutsche Telekom, will serve as Chairman of the Board. Union of T-Mobile and MetroPCS, a dynamic new player have been created in the wireless industry that has the right strategy and management team in place to compete successfully in today's marketplace. A few facts about America's Un-carrier: •2012 combined entity results would have reflected $24.8 billion of revenue, $6.4 billion of adjusted EBITDA, $3.7 billion of capital expenditures (excluding spectrum purchases), and $2.7 billion of free cash flow. •Approximately 43 million subscribers as of March 31, 2013, two exceptionally...
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