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Bloomberg: T-Mobile value might have dropped $13 billion after failed AT&T sale

Despite being seen as part of the US carriers “Big Four” by everyone, T-Mobile hasn’t exactly had the most prodigious and quiet year. First, there’s been talk about a merger with AT&T, which should have resulted in one wireless service giant almost impossible to compete against.
October 5, 2012

Despite being considered one of the US carriers “Big Four”, T-Mobile hasn’t exactly had the most prodigious year. First, there’s been talk about a merger with AT&T, which should have resulted in a wireless service giant that would have been almost impossible to compete against.

However, what seemed like a done deal got cancelled in December 2011 after regulatory hurdles. More exactly, the FCC opposed the merger saying that it could harm competition, increase prices for consumers, and reduce innovation.

While AT&T didn’t seem to suffer much after the failed buyout, Magenta struggled with client losses that of course led to financial deficits. The carrier’s image rebranding and the introduction of a new prepaid pricing structure overturned its fortunes a bit, although the company’s Q2 2012 financial report still didn’t look that hot.

But just when most of us were ready to discard T-Mo from the “Big Four” and proclaim the battle for supremacy a three-way affair between AT&T, Verizon and Sprint, the number four carrier in the States dropped the bomb.

T-Mobile agreed to a merger with up and coming regional carrier MetroPCS, but this time Magenta would play a leading role in the transaction. We already heard about the financial details of the deal, as well as about what the merger will mean to regular users, but one question still remained unanswered. How exactly is T-Mobile doing money-wise after such a troubled year?

Fortunately, Bloomberg came to the rescue of all those haunted by such “existential” questions, with a short analysis that shows that T-Mobile might have lost as much as $13 billion of its market value following the failed sale to AT&T.

T-Mobile USA isn’t publicly traded, so that figure should be taken with a small pinch of salt, but, based on MetroPCS’s share price and analyst estimates, Deutsche Telekom’s US subsidiary is now worth about $26 billion including debt.

AT&T was going to buy T-Mo USA for $39 billion last year, so after doing some quick math it seems that Magenta has dropped $13 billion in value in less than 12 months, or 33% of the 2011 valuation.

Deutsche Telekom officials declined to comment on the matter (which is in itself a sort of a confirmation of the speculations’ accuracy), but even with the MetroPCS buyout it seems that the German parent company hasn’t abandoned its plans of exiting the US wireless market in the near future.

“T-Mobile’s implied valuation is not as good as in the AT&T deal. Still, the merger (between T-Mobile and MetroPCS, Ed.) has the potential for synergies and if the new company delivers, there is a path for a profitable exit for Deutsche Telekom.” said Frederic Boulan, a financial analyst in a talk with Bloomberg.

Do you think Bloomberg’s number is accurate? Can so much money be lost in such little time? And could this new merger bring T-Mo some of its mojo back? Finally, would you be sad to see T-Mobile USA dissapear?