Predicted Wireless Consolidation could see T-Mobile Takeover

by Matt Klassen on June 6, 2016

for-sale-signOne asset management firm has predicted continued attempts at consolidation among the country’s top four carriers going forward, and considers T-Mobile as the most likely target for acquisition. According to Gabelli & Co., “While most substantive M&A [merger and acquisition] discussions in the wireless sector are currently on hold due to the broadcasting spectrum auction, in the long run, there will likely be more consolidation in the space. T-Mobile could become a potential partner to a number of parties.”

While nothing will likely happen quickly, with four national players remaining in place in the near term, the firm does expect further market consolidation over the long term, and simply put, T-Mobile is the most attractive option available. In fact, the firm argues that T-Mobile is “essentially the only way for a domestic or foreign company to enter the U.S. wireless market in a meaningful way.”

The report names several potential suitors, including two companies, Comcast and Dish Network, long known for their interest in entering the wireless sector, as well as Charter Communications/Liberty Media, and perhaps even seeing Softbank/Sprint revisit its interest in acquiring the company over the longer term. Beyond that, there could be a host of foreign carriers and/or private equity firms that might like to take a stab at the wireless market. All that to say, T-Mobile’s current success is making it far more attractive acquisition bait than ever before.

Although Gabelli is not anticipating an imminent bid to acquire T-Mobile, it does consider consolidation inevitable, and given that, T-Mobile will be bought, it’s a matter of when, not if. Of course add to that the fact that T-Mobile parent company Deutsche Telekom has long sought to divest itself of its American subsidiary, and it does indeed seem like the perfect situation for many potential suitors.

But of course we’ve seen consolidation efforts before, from AT&T’s failed bid to buy the carrier for $39 billion in 2011, efforts that were blocked by the US Justice Department over anti-competitive concerns, to Sprint parent company Softbank’s initial interest in doing the same in 2013, which was quickly curtailed over threats of a similar regulatory battle, to Dish Network continually kicking the tires of such a merger.

That said, T-Mobile’s appeal as an acquisition target hasn’t dissipated. In fact, with the company’s ongoing UnCarrier promotional efforts paying off in spades and continued expansion and development of its LTE network, the company is more attractive now than ever before.

Not only that, but according to Gabelli, T-Mobile’s management team “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.” As I said, while an imminent acquisition of T-Mobile is doubtful, given the direction of the wireless market, the eventual takeover of America’s UnCarrier seems inevitable.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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