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MetroPCS Files Investor Presentation



                     MetroPCS Files Investor Presentation

Urges Stockholders to Vote 'For' Proposed Combination with T-Mobile USA

PR Newswire

RICHARDSON, Texas, March 18, 2013

RICHARDSON, Texas, March 18, 2013 /PRNewswire/ -- MetroPCS Communications,
Inc. (NYSE: PCS; "MetroPCS" or the "Company") today announced it has filed an
investor presentation with the Securities and Exchange Commission ("SEC") in
connection with MetroPCS' Special Meeting of Stockholders scheduled for April
12, 2013.  At the Special Meeting, MetroPCS' stockholders of record as of
March 11, 2013 will vote on matters relating to the proposed combination of
MetroPCS with T-Mobile USA, Inc. ("T-Mobile") to create the value leader in
the U.S. wireless marketplace.  The MetroPCS board of directors unanimously
recommends that stockholders vote FOR the proposed combination with T-Mobile.

The presentation, which is available on the SEC's website at www.sec.gov and
on the Company's website at http://investor.metropcs.com, includes information
demonstrating that the proposed combination is the best alternative for
MetroPCS' stockholders and will create sustainable long-term value for
MetroPCS' stockholders.  In addition, the presentation corrects inaccuracies
and misperceptions created by certain stockholders regarding the proposed
combination.  Highlights of the presentation include:

  o The Proposed T-Mobile/MetroPCS Combination is the Best Alternative for
    MetroPCS' Stockholders: After conducting a thorough and extensive
    multi-year process, MetroPCS' board of directors and special committee,
    with the assistance of their independent financial and legal advisors,
    concluded that the proposed combination with T-Mobile was the best
    strategic alternative for the Company and its stockholders.  The proposed
    combination: 

       o Provides compelling economic terms for MetroPCS' stockholders;
       o Addresses MetroPCS' critical spectrum needs and other competitive
         disadvantages;
       o Permits expansion of MetroPCS' brand into unserved and underserved
         major metro areas; and
       o Improves the customer value proposition through a stronger, deeper
         data network and a broader, better device line-up.

  o If the proposed combination is not approved, MetroPCS' stockholders will
    not enjoy its compelling benefits, which could lead to a loss of value for
    MetroPCS' stockholders.

  o The Proposed T-Mobile/MetroPCS Combination is More Attractive than
    MetroPCS on a Stand-Alone Basis: The proposed combination will provide
    MetroPCS' stockholders with a $1.5 billion aggregate cash payment, or
    approximately $4.06 per share (prior to the reverse stock split that will
    occur in connection with the closing of the proposed combination), as well
    as an approximate 26% ownership stake in the combined company that will
    allow MetroPCS' stockholders to participate in the expected significant
    equity upside of the combined company.  The proposed combination maximizes
    stockholder value as illustrated below:

       o At 5x 2013 forecasted EBITDA (illustrative):^1

            + The value for MetroPCS' stockholders, including the net present
              value of projected cost synergies,^2 represents an approximately
              70%^3 - 93%^4 premium to the stand-alone MetroPCS value per
              share;^4 and
            + The stand-alone MetroPCS value per share (after deducting $1.5
              billion in cash reserved for the acquisition of spectrum)^4
              represents an approximately 18% decline vs. the current MetroPCS
              share price.^1

       o Based on the five-year discounted cash flow analysis undertaken by
         the MetroPCS special committee's independent financial advisor,^5
         MetroPCS' stockholders will receive:

            + An approximately 46% premium vs. a stand-alone MetroPCS value;
              and
            + An approximately 143% premium vs. the average price target,^6
              assuming the $6-7 billion of net present value^2 projected cost
              synergies ^ are achieved.

  o The Proposed T-Mobile/MetroPCS Combination Creates Sustainable Long-Term
    Value for Stockholders: MetroPCS' stockholders are expected to benefit
    meaningfully from the combined company's:

       o Value Leadership: The combined company will be well-positioned and
         have a significant presence in the industry's fast-growing prepaid
         (i.e., no annual contract) services space – and offer an outstanding
         customer experience with great customer value and choice;
       o Increased Size and Scale: The combined company will be
         well-positioned competitively with significant spectrum holdings,
         deep nationwide network coverage and more network capacity;
       o Significant Synergies: The combined company will benefit from
         projected cost synergies of $6-7 billion net present value;^2 and
       o Strong Financial Position: The combined company will have attractive
         growth prospects and financial flexibility, direct capital markets
         access to compete effectively and a sustainable capital structure and
         credit profile as evidenced by the combined company's S&P BB credit
         rating.

  o MetroPCS Conducted a Thorough and Extensive, Multi-Year Process to
    Maximize Value, Culminating in the Proposed T-Mobile/MetroPCS Combination:
    The MetroPCS board and special committee, with the assistance of
    independent financial and legal advisors, undertook a thorough and
    extensive, multi-year process to explore all strategic and financial
    alternatives – including remaining a standalone company – prior to
    recommending the proposed combination with T-Mobile.  During this thorough
    and extensive process, MetroPCS: 

       o Engaged in discussions with all major spectrum holders and potential
         strategic parties regarding spectrum acquisition and M&A
         opportunities;
       o Participated in significant FCC auctions of spectrum with
         disappointing results;
       o Weighed the benefits and risks of the proposed combination against
         the benefits and risks of remaining a stand-alone company; and
       o Determined that the proposed combination with T-Mobile would deliver
         the highest value to MetroPCS' stockholders. 

  o The Combined Company will be the Value Leader in U.S. Wireless: The
    combined company will be well-capitalized and well-positioned to compete
    effectively with large national carriers as the premier challenger in the
    U.S. wireless marketplace.  The proposed combination will:

       o Allow the combined company to extend the MetroPCS brand into unserved
         and underserved major metro areas;
       o Facilitate the offering of a broad product portfolio, including Apple
         devices;
       o Generate substantial additional growth in the fast-growing no
         contract space; and
       o Provide significant spectrum with a path to at least 20x20 MHz 4G LTE
         in approximately 90% of the top 25 U.S. metro areas by 2014+ for a
         fast, reliable and robust nationwide 4G LTE network. 

  o The Combined Company's Strong Financials and Capital Structure are
    Compelling for MetroPCS' Stockholders: The combined company will have an
    attractive growth profile and the financial flexibility to compete
    effectively.  In addition, the combined company's capital structure, and
    MetroPCS stockholders' significant ownership position, will provide
    MetroPCS' stockholders with the opportunity for significant participation
    in the attractive equity upside potential of the combined company.
     Specifically, the combined company is expected to have: 

       o Target five-year (from 2012 to 2017) compounded annual growth rates
         in the range of 3% to 5% for revenues, 7% to 10% for EBITDA and 15%
         to 20% for free cash flow;^7
       o Target EBITDA margins of 34% to 36% at the end of the five-year
         period (from 2012 to 2017); and
       o Projected cost synergies of $6-7 billion net present value,^2 with an
         annual run-rate of
         $1.2-1.5 billion after an integration period.

  o The Statements Regarding the Proposed Combination by Certain Stockholders
    are Inaccurate and Misleading: MetroPCS would like to correct inaccuracies
    and misperceptions regarding the proposed combination:

  o Misperception #1: Leverage is too high.

       o Reality: Leverage is appropriate for the combined company and is
         in-line with peers and MetroPCS' historical average.

            + The combined company's LTM leverage is in-line with peers and
              MetroPCS, and its S&P credit rating of BB is higher than peers
              and MetroPCS, as shown in the table below;

 

Comparison of NewCo Peers – Leverage and Credit Rating^8

Based on LTM EBITDA
               Leap PF Sprint^9 NewCo MetroPCS T-Mobile^10
Gross Leverage 5.5x 5.5x        3.6x  3.1x     3.6x
Net Leverage   4.4x 3.0x        3.4x  2.4x^11  3.6x
S&P Rating     B-   B+          BB    B+       NA

        + The combined company is expected to de-lever organically after 2013
          as a result of cost savings initiatives, lower capital expenditures
          and post-integration synergies;
        + The combined company's agreement with Apple is projected to be
          accretive to operating free cash flow beginning in 2014; and 
        + Investor comfort with the combined company's capital structure and
          credit profile is underscored by strong support for the combined
          company's recent senior notes offering as well as the December 2012
          consent solicitation on MetroPCS' existing senior notes.

  o Misperception #2: The Deutsche Telekom ("DT") debt terms are unreasonable.

       o Reality: The debt terms are market-based and represent a favorable
         deal for the combined company.

            + No market remotely exists for the size of the required $21
              billion debt commitment – at the time of the deal announcement
              or today;
            + The pricing mechanism of the DT debt is designed to reflect
              market conditions;
            + The DT debt enables the combined company to avoid significant
              fees and pricing risks at closing; and
            + DT's financing provides the combined company with a long-lasting
              capital structure with no near-term maturities and significant
              breathing room.

  o Misperception #3: The combined company should issue secured debt.

       o Reality: Unsecured debt provides the combined company with
         significantly greater flexibility.

            + Secured debt would contain more restrictive financial covenants
              and therefore more significantly impair the combined company's
              ability to invest and compete;  
            + No secured debt was a key DT requirement since DT's controlling
              ownership prevents the combined company from having secured debt
              and allowed the combined company to reduce DT's financing costs;
              and
            + DT's significant debt and equity stake were important elements
              in securing the combined company's attractive credit rating and
              cost of capital.

  o Misperception #4: The 26% / 74% ownership split is unfair at multiple
    parity.

       o Reality: A less favorable ownership stake of between 17%^3-24%^4would
         result after appropriate adjustments for $1.5 billion MetroPCS cash
         reserved for spectrum and $1.5 billion cash payment as disclosed in
         the MetroPCS amended definitive proxy statement.

 

MetroPCS Ownership Analysis

Based on adjusted T-Mobile EBITDA (as disclosed in the MetroPCS amended
definitive proxy statement)^18
                                            MetroPCS         T-Mobile
PSAM/Paulson Multiple --> Firm Value/EBITDA 5.0x^1           5.0x^1
2013E EBITDA                                $1,359^12        $5,132^13
Firm Value                                  $6,795           $25,660
Less: Net Debt                              ($2,147)^14      ($17,461)^10
Less: Cash for Spectrum                     ($1,500)         --
Less: Cash Payment                          ($1,500)         --
Equity Value                                $1,648           $8,199
--> Implied Ownership Split                 17%              83%

 

        + MetroPCS' combination with T-Mobile results in significantly more
          value to MetroPCS' stockholders vs. MetroPCS on a stand-alone basis.

 

Multiples Analysis

Pro-forma Total Value to MetroPCS' Stockholders Based on 26% Ownership
Split^18
                                                          NewCo    MetroPCS

                                                                    
                                                          Proxy    Stand-Alone

                                                          Math^15  Math
Firm Value/EBITDA^1
                                                          5.0x     5.0x
 
2013E Pro Forma EBITDA                                    $6,491^4 $1,359^12
Pro Forma Firm Value                                      $32,455  $6,795
       Less: Net Debt                                     (21,500) (2,147)^14
       Less: Cash reserved for Spectrum                   --       (1,500)
Pro Forma Equity Value                                    $10,955  $3,148
MetroPCS Implied Equity Value (26%)                       $2,848   $3,148
Implied Share Price                                       $7.70    $8.51
      Plus: Cash Payment per Share to MetroPCS            $4.06    --
Stockholders
Total Value to MetroPCS' Stockholders                     $11.76   $8.51
Premium/(Discount) to MetroPCS Standalone Value^16        38%      --
      Plus: NPV of Synergies per Share^17                 $4.71    --
Total Value to MetroPCS' Stockholders Including Synergies $16.47   $8.51*
Premium/(Discount) to MetroPCS Standalone Value^16        93%      --
 *(18%) discount to current MetroPCS share price^1

 

As the above analysis demonstrates, the proposed combination benefits
MetroPCS' stockholders and is a better alternative than remaining a
stand-alone company.  As a result, the MetroPCS board unanimously recommends
that stockholders vote their shares FOR all of the proposals relating to the
proposed combination with T-Mobile by returning their GREEN proxy card with a
"FOR" vote for all proposals.   Because some of the proposals required to
close the proposed transaction require at least an affirmative vote of a
majority of all outstanding shares, the votes of all of MetroPCS' stockholders
are important.  The failure to vote or an abstention will have the same effect
as a vote against the proposed combination. If stockholders vote against the
proposed combination, there can be no assurance that MetroPCS will be able to
deliver the same or better stockholder value.

The Company urges stockholders to discard any white proxy cards, which were
sent by a dissident stockholder.  If a stockholder previously submitted a
white proxy card, the Company urges them to vote as instructed on the GREEN
proxy card, which will revoke any earlier dated proxy card that was submitted,
including any white proxy card.

Stockholders who have questions or need assistance in voting their shares
should contact the Company's proxy solicitor, MacKenzie Partners, Inc.
toll-free at (800) 322-2885 or call collect at (212) 929-5500.

 

If stockholders have any questions or need assistance with voting their GREEN
proxy card,

please contact the Company's proxy solicitor, MacKenzie Partners, at the phone
numbers

listed below.

 

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

(212) 929-5500 (call collect)

Or

TOLL-FREE (800) 322-2885

 

About MetroPCS Communications, Inc.

Dallas-based MetroPCS Communications, Inc. (NYSE: PCS) is a provider of no
annual contract, unlimited wireless communications service for a flat-rate.
MetroPCS is the fifth largest facilities-based wireless carrier in the United
States based on number of subscribers served. With Metro USA(SM), MetroPCS
customers can use their service in areas throughout the United States covering
a population of over 280 million people. As of December 31, 2012, MetroPCS had
approximately 8.9 million subscribers. For more information please visit
www.metropcs.com.

Additional Information and Where to Find It

This document relates to a proposed transaction between MetroPCS and Deutsche
Telekom. In connection with the proposed transaction, MetroPCS has filed with
the Securities and Exchange Commission (the "SEC") an amended definitive proxy
statement. Security holders are urged to read carefully the amended definitive
proxy statement and all other relevant documents filed with the SEC or sent to
stockholders as they become available because they will contain important
information about the proposed transaction. All documents are, and when filed
will be, available free of charge at the SEC's website (www.sec.gov). You may
also obtain these documents by contacting MetroPCS' Investor Relations
department at 214-570-4641, or via e-mail at investor_relations@metropcs.com.
This communication does not constitute a solicitation of any vote or approval.

Participants in the Solicitation

MetroPCS and its directors and executive officers will be deemed to be
participants in any solicitation of proxies in connection with the proposed
transaction. Information about MetroPCS' directors and executive officers is
available in MetroPCS' annual report on Form 10-K filed with the SEC on March
1, 2013. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, is contained in the amended definitive proxy
statement and other relevant materials filed with the SEC regarding the
proposed transaction. Investors should read the amended definitive proxy
statement carefully before making any voting or investment decisions.

Cautionary Statement Regarding Forward-Looking Statements

This document includes "forward-looking statements" for the purpose of the
"safe harbor" provisions within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended. Any statements made in this
document that are not statements of historical fact, and statements about our
beliefs, opinions, projections, strategies, and expectations, are
forward-looking statements and should be evaluated as such. These
forward-looking statements often include words such as "anticipate," "will,"
"expect," "suggests," "plan," "believe," "intend," "estimates," "targets,"
"views," "projects," "should," "would," "could," "may," "become," "forecast,"
and other similar expressions. These forward-looking statements include, among
others, statements about the benefits of the proposed combination, the
prospects, value and value creation capability of the combined company,
compelling terms and nature of the proposed combination, future expansion of
the MetroPCS brand into new areas, whether metro areas are unserved or
underserved, benefits to MetroPCS customers, value of the proposed combination
to MetroPCS stockholders, future MetroPCS stock prices, expected growth in the
no contract space, customer perceptions of the combined company's service,
projected cost synergies and the combined company's ability to achieve them,
forecasts of combined company revenues, EBITDA, and FCF, projected 5-year
CAGRs, ability of the combined company to compete, MetroPCS' ability to
acquire spectrum,  the combined company's leverage ratios and its ability to
de-leverage organically, the combined company's spectrum position, the
combined company's competitive position, impact of the proposed combination on
LTE roll-out and benefits of LTE network, MetroPCS' projected upgrade rate,
projected financing costs, ability of the combined company to deleverage over
time, ability and rates of financing available in the market, and other
statements regarding the combined company's strategies, prospects, projected
results, plans, or future performance.

All forward-looking statements involve significant risks and uncertainties
that could cause actual results to differ materially from those in the
forward-looking statements, many of which are generally outside the control of
MetroPCS, Deutsche Telekom and T-Mobile and are difficult to predict. Examples
of such risks and uncertainties include, but are not limited to, the
possibility that the proposed transaction is delayed or does not close,
including due to the failure to receive the required stockholder approvals or
required regulatory approvals, the taking of governmental action (including
the passage of legislation) to block the proposed transaction, the failure to
satisfy other closing conditions, the possibility that the expected synergies
will not be realized, or will not be realized within the expected time period,
the significant capital commitments of MetroPCS and T-Mobile, global economic
conditions, fluctuations in exchange rates, competitive actions taken by other
companies, natural disasters, difficulties in integrating the two companies,
disruption from the transaction making it more difficult to maintain business
and operational relationships, actions taken or conditions imposed by
governmental or other regulatory authorities and the exposure to litigation.
Additional factors that could cause results to differ materially from those
described in the forward-looking statements can be found in MetroPCS' annual
report on Form 10-K, filed March 1, 2013, and other filings with the SEC
available at the SEC's website (www.sec.gov).  The results for any prior
period may not be indicative of results for any future period.

The forward-looking statements speak only as to the date made, are based on
current assumptions and expectations, and are subject to the factors above,
among others, and involve risks, uncertainties and assumptions, many of which
are beyond our ability to control or ability to predict. You should not place
undue reliance on these forward-looking statements. MetroPCS, Deutsche Telekom
and T-Mobile do not undertake a duty to update any forward-looking statement
to reflect events after the date of this document, except as required by law.

Investor Relations Contacts: 
Keith Terreri, Vice President - Finance & Treasurer
Jim Mathias, Director - Investor Relations 
214-570-4641 
investor_relations@metropcs.com

 

^1 The premium is calculated based on EBITDA multiples used by P. Schoenfeld
Asset Management LP (PSAM) and Paulson & Co. Inc. (Paulson) applied to
MetroPCS management forecasted combined company EBITDA for 2013, which
forecasts are set forth in the MetroPCS amended definitive proxy statement.
The stock price is the closing price on the NYSE of $10.38 on March 15, 2013.

^2 Net present value calculated with 9% discount rate and 38% tax rate.
Synergies are preliminary projections and subject to change.

^3 EBITDA is based on unadjusted T-Mobile management forecast combined company
EBITDA for 2013, which forecasts are set forth in the MetroPCS amended
definitive proxy statement.

^4 EBITDA is based on MetroPCS management's forecast of combined company
EBITDA for 2013, which forecasts are set forth in the MetroPCS amended
definitive proxy statement.

^5 Based on the analysis conducted by the financial advisor to the special
committee of MetroPCS' board of directors, as included in the MetroPCS'
amended definitive proxy statement.

^6 Calculated based on the average target prices of publicly available
research analyst reports for MetroPCS published on or after July 25, 2012 that
were available to the financial advisor to the special committee of the
MetroPCS board of directors as of October 2, 2012, which were referenced by
the financial advisor to the special committee of MetroPCS' board of
directors, as included in the MetroPCS amended definitive proxy statement.

^7 Free Cash Flow is calculated as EBITDA less Capital Expenditure (excluding
spectrum spend).

^8 Based on latest reported financials; NewCo numbers represent the sum of
T-Mobile and MetroPCS.

^9 Based on Sprint (PF Clearwire), US Cellular and Softbank transactions

^10 Based on target net debt of $17.5 billion ($15 billion DT notes and $2.5
billion tower financing obligation as of 12/31/12).

^11 Includes $1.5 billion in cash reserved for the acquisition of spectrum.

^12 Based on MetroPCS management projections as disclosed in the MetroPCS
amended definitive proxy statement; NewCo net debt based on management
guidance.

^13 EBITDA is based on MetroPCS management's forecast of T-Mobile EBITDA for
2013, which forecasts are set forth in the MetroPCS amended definitive proxy
statement.

^14 Based on latest reported financials as of 12/31/12.

^15 Based on MetroPCS management projections as disclosed in the MetroPCS
amended definitive proxy statement; NewCo net debt based on management
guidance.

^16 Based on MetroPCS standalone value per share of $8.51.

^17 26% of projected $6-7 billion NPV^2 of synergies as disclosed in the
MetroPCS amended definitive proxy statement

^18 This table should be read in conjunction with the presentation filed by
MetroPCS with the SEC on Schedule 14A on March 18, 2013, which provides
additional detail regarding the information set forth in this table.

 

SOURCE MetroPCS Communications, Inc.

Website: http://www.metropcs.com
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