The Deutsche Telekom subsidiary is paying $27 in cash for each Suncom share, or $1.6bn in total and assuming $800m in debt. The price works out at $2,181 for each of SunCom’s 1.1 million subscribers, considerably less than the $3,729 per subscriber that Verizon was prepared to pay when its bought Rural Cellular last month for $2.67bn in the continued consolidation of US cellular operators.
However, SunCom has a poor financial record and, in its financial year to December 31, it recorded a net loss of $337.4m on revenue of $852.9m. To cut debts, it announced in January a deal where bondholders exchanged $708m in debt for 87.5% of its common stock.
The company was kicked off the New York stock exchange in December 2006 for failing to meet the market capitalization standard and was only readmitted in July.
Against this background, SunCom’s board welcomed the T-Mobile bid, which offers its shareholders a 22% premium to the closing price on Friday.
Last year, T-Mobile USA won bids from the FCC for 120 spectrum licenses covering the continental US, Hawaii, Puerto Rico/US Virgin Islands, Alaska, and major markets including New York City, Los Angeles, and Chicago.
T-Mobile USA, which provides 26 million of the 110 million mobile customers served by companies of the Deutsche Telekom group, was one of its most dynamic activities. It provides an important engine of growth for a company dogged by trade union problems and falling landline revenue.
