Merger Talks for T-Mobile as Estimates of New Subscribers Stronger Than Expected

The communication giant, T-Mobile US Inc. is planning merger talks after the ban put by the federal government expires this week. T-Mobile, the No.3 US wireless carrier said this on Monday as they reported a subscriber growth, which was more than what was expected in their first quarter.

The Federal Communications Commission of USA banned talks of mergers between telecommunication companies for about a year because it conducted about $20 Billion auction of broadcaster airways for use of wireless communication. The companies that took part in this auction were restrained by a period, which will be ending on 27th April when payments from winners of the auction are due.

With a bid of $8 Billion, T-Mobile was the largest winner and they are widely expected to be making the first discussion of mergers.

John Legere, the Chief Executive Officer of the company said that the organic and inorganic possibilities of this company are enormous and they are interested in looking at some possibilities on the matter. He said so on the post earnings conference call of the company.

In February, Reuters reported that the controlling shareholder of Sprint, Softbank Group Corp. was in talks with the shareholder of T-Mobile, Deutsche Telekom AG once the auction of the airwaves ended.

Many analysts and investors have pointed out that T-Mobile has other options too like staying independent or combining with Comcast Corp or Dish Network Corp and other companies like them as they try to improve their own network. They said with their airwave purchase they can compete in all the corners of this country.

On the same call, the CEO said that Dish, the satellite TV provider has access to spectrum and content and Sprint had a lot of scale options and a customer base that is really good.

The company has already started gaining the share of competitors like Verizon Communications Inc. and AT&T Inc. by lowering their prices and improving their network in a US wireless market that is largely saturated.

They have already added 914,000 subscribers who pay monthly bills during the 1st January – March 31st quarter. The analysts had expected net additions of about 847,000 subscribers in this quarter.

Customer defection or churn was less than 1.18% as compared to the estimation of analysts of 1.27%

The overall income rose from $479 Million to $698 Million or in terms of per share, from 56 cents to 80 cents as compared to a year earlier.

Earnings per share excluding items was 48 cents and the adjusted revenue was about $9.61 Billion. On an average, analysts expected EPS of 35 cents and the revenue was expected to be $9.67 Billion, according to the analysts.

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