Rumors Resurface That T-Mobile Could Be a Takeover Target
Charles King, principal analyst with Pund-IT, said that the latest rumors about a possible T-Mobile acquisition "also reflect a recognition within the industry that traditional cable services are being threatened and supplanted by wireless media services, particularly in critical younger demographics like 25- to 35-year-olds. Ignoring those trends would be foolish in the extreme, and acquiring a wireless carrier, especially one as dynamic as T-Mobile would provide a great foundation for future development." Yet despite the latest merger rumors, King said he thinks that the company would be better off staying independent. "Doing so and partnering with other service providers to develop integrated packages for specific markets could accomplish many of the same goals as being acquired," he said. "However, managing individual partnerships would also be more complex and fraught with potential problems or failure. In the end, Legere is a businessman and I expect a terrific deal would be difficult to refuse unless he believed better opportunities were on the horizon." Jan Dawson, chief analyst for Jackdaw Research, told eWEEK he thinks that acquisition rumors will continue to swirl about T-Mobile until a deal eventually does get done, simply because the company has plenty of interest from others. The company is "sub-scale in the U.S. market, its parent has wanted to sell its holding for quite some time and there are quite a few interested parties around," said Dawson. "With Altice taking over Cablevision, that introduces another possible acquirer into the mix as well. I don't see T-Mobile remaining a subsidiary of Deutsche Telekom forever, and I think it's almost inevitable that they get bought at some point. The big questions in my mind are the identity of the buyer, and the ability of that buyer to drive sufficient synergies to dramatically improve T-Mobile's margins." Rob Enderle, principal analyst at Enderle Group, said he sees T-Mobile as a "bit of a bargain" right now, but he doesn't expect it to be a cheap target for long. "For a cable firm without a wireless position, they would be an attractive option," he said. "Long term, I expect T-Mobile will merge to get greater scale. I could also argue that, strategically, T-Mobile would likely be better not merging so they don't later have to divest the cable business."In early August 2014, Sprint dropped its plans to buy T-Mobile after regulators opposed the move. Sprint had been rumored for months to be seeking a merger with T-Mobile so that the two struggling companies could join together and fight harder to compete with mobile powers Verizon Wireless and AT&T. Neither company ever commented publicly on those rumors until Sprint finally said in August that it was giving up its plans. Following the aborted merger attempt, Sprint then shook up its executive ranks by replacing its CEO, Dan Hesse, with Marcelo Claure, the founder and CEO of Brightstar, a subsidiary of Softbank, Sprint's parent company. In December 2014, rumors circulated that Sprint might again try to buy T-Mobile, but the reports were quickly dashed, according to an earlier eWEEK report.
In June, reports also circulated that T-Mobile US was talking with Dish Network about a merger that could finally bring T-Mobile together with a partner. That merger possibility followed the announcement in late May that Charter Communications is acquiring Time Warner Cable, the second-largest U.S. cable company. The Charter-Time Warner deal came just a month after an earlier $45 billion TWC acquisition proposal by Comcast fell apart due to potential roadblocks from federal regulators who were leery of the merger due to concerns about unfair competition and harm to industry innovation.