Mobile operator T-Mobile US has said it plans to issue up to US$2bn of senior notes, as it looks to add to a war chest for spectrum acquisitions. The American challenger has mandated JP Morgan, Credit Suisse, Deutsche Bank, Citigroup, Goldman Sachs, RBC…
Mobile operator T-Mobile US has said it plans to issue up to US$2bn of senior notes, as it looks to add to a war chest for spectrum acquisitions.
The American challenger has mandated JP Morgan, Credit Suisse, Deutsche Bank, Citigroup, Goldman Sachs, RBC Capital Markets, and RBS as joint bookrunners for the two-tranche offering.
T-Mobile will sell the notes due in 2022 and 2024 in a public offering. It plans to use the proceeds for “capital investments, enhancing its financial flexibility and opportunistically acquiring additional spectrum in private party transactions and/or government auctions”, it said in a statement.
This was the same reason the operator gave for a recent share issue. Today T-Mobile said the banks working on the stock offering exercised their greenshoe option, taking the proceeds from that transaction to US$1.8bn.
In its Q3 results, T-Mobile reported cash on hand of US$2.4bn. Coupled with the prospective returns of this latest offering and the share issue, the operator would have US$6.2bn in available cash.
Nomura analyst Adam Ilkowitz felt that if the proceeds were to be used to buy spectrum, then Verizon Communications could be the beneficiary.
“Given this incremental US$2bn debt offering, T-Mobile appears even more likely to purchase the 700 MHz A-Block licences that Verizon CFO Fran Shammo recently discussed as still for sale at the right price,” Ilkowitz said in a memo to investors.
However, he also said that refinancing bonds issued by MetroPCS – which T-Mobile merged with earlier this year – was also a possibility: “While not explicitly mentioned, we note that several MetroPCS bonds are currently callable … We believe the MetroPCS’s 7.875% 2018 notes can be called, with US$1bn currently outstanding. We believe other MetroPCS notes are callable, but only with the proceeds of the recent equity issuance.”
T-Mobile’s only bond offering since the MetroPCS merger came in August when it sold US$500m of 5.25% senior notes due 2018. In October its parent Deutsche Telekom sold US$5.6bn of the T-Mobile bonds it held, up from an initial US$3.1bn due to strong investor appetite.
Those notes had been issued by T-Mobile to its German parent and formed part of a US$11.2bn private placement made when the US operator merged with MetroPCS earlier this year, as a way to structure the new company’s debt. The Bonn-based incumbent still holds US$5.6bn of T-Mobile debt in the form of senior reset notes.
