MetroPCS Climbs After Analyst Says Sprint May Counterbid

MetroPCS Communications Inc. (PCS), which agreed to merge with T-Mobile USA Inc. last month, rose 5 percent after a Guggenheim Securities LLC analyst said Sprint Nextel Corp. (S) may make a counteroffer for the company.

Sprint could bid $12 to $13 a share for MetroPCS within the next four weeks, Shing Yin, a Guggenheim analyst in New York, said today in a report. Sprint extended its deadline yesterday for a proxy statement relating to a separate deal with Japan’s Softbank Corp. (9984) That move supports the idea that Sprint is preparing a MetroPCS bid, Yin said in his report.

MetroPCS gained 5 percent to close at $10.65 in New York, the biggest one-day jump since Oct. 2. The shares are up 23 percent this year.

The company agreed last month to merge with Deutsche Telekom AG (DTE)’s T-Mobile USA division. Under the deal, the German parent company will hold 74 percent of the combined entity and pay MetroPCS shareholders $1.5 billion in cash.

The new company would have 42.5 million subscribers, or about 11.7 percent of the U.S. wireless market, according to data compiled by Bloomberg. Sprint, the third-largest provider, has 15.2 percent. The two biggest carriers in the industry, Verizon Wireless (VZ) and AT&T Inc. (T), have a combined 58.5 percent of the market.

Hard to Match?

If Sprint makes an offer, Deutsche Telekom may struggle to offer better terms, Yin said.

“To counter a $13 per share bid from Sprint, if that were to occur, we estimate DT would have to give 43 percent to 47 percent of the combined company to PCS shareholders -- likely a tough proposition for DT shareholders to accept,” Yin said in an e-mail.

Sprint also may have delayed its Softbank filing for other reasons, such as a transaction with Clearwire Corp. (CLWR), Yin said. Sprint is the biggest investor and customer for Clearwire, an unprofitable company building a nationwide wireless network. Clearwire shares jumped 5 percent to close at $2.32 today.

The MetroPCS gain follows a slump in the shares since the Deutsche Telekom deal was signed. Before today, MetroPCS shares had fallen more than 23 percent since early October.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.