T-Mobile Ponders a Mega Public Offering

Posted Feb 5th 2010 9:50AM by Tom Taulli
Filed under: Rumors, AT and T (T), Verizon Communications (VZ), Initial Public Offerings

As the number four wireless carrier, the situation is grim for T-Mobile USA. In this industry, size does matter in terms of network coverage and access to phone options. Plus, there is downward pressure on pricing, such as from prepaid operators like Leap (LEAP) and MetroPCS (PCS).

Now, it looks like shareholders are losing their patience with T-Mobile, which is actually owned by German giant Deutsche Telekom AG (DT).

So how about an IPO? This appears to be the talk right now, according to a report in The Wall Street Journal late Thursday. In fact, the company has had meetings with underwriters, like Deutsche Bank AG.

An IPO is really the only choice. The reason is that a merger with AT&T (T) or Verizon (VZ) would likely not withstand antitrust scrutiny.

And yes, an IPO of T-Mobile would also be a big deal. The company has 33 million customers and has innovative phones based on Google's (GOOG) Android technologies.

So how big would this deal be? If Deutsche Telekom sells 20% of its T-Mobile shares, it may generate $4 billion to $5 billion in cash. Besides being a nice windfall for investors, the cash could also help fund a next-generation network. This would be critical as T-Mobile continues to lose customers to rivals.

Tom Taulli advises on business tax preparation and resolving tax problems. He is also the author of a variety of books, including the including The Complete M&A Handbook. His website is at Taulli.com.

Tags: dt, featured, goog, IPOs, leap, pcs, T-Mobile