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T-Mobile to Sell $1.8 Billion in Stock to Buy Airwaves

T-Mobile US Inc., the country’s fourth-largest mobile-phone carrier, plans to sell shares valued at almost $1.8 billion, raising money it could use to acquire wireless airwaves.

The secondary offering of 66.2 million shares will be managed by Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG, T-Mobile said yesterday. The $1.8 billion valuation is based on the stock’s closing price of $26.97 in New York yesterday. T-Mobile will grant the underwriters the option to buy as many as 6.62 million additional shares.

The company, based in Bellevue, Washington, said it may use the proceeds to acquire wireless spectrum -- either from other parties or through government auctions. Airwaves have become increasingly valuable as carriers struggle to handle the flood of Internet traffic on smartphones and other devices. T-Mobile is already considering a deal to gain spectrum from an unnamed private party, according to a separate filing.

T-Mobile needs to bolster its spectrum holdings, especially as its rivals fight harder for customers, said James Moorman, an analyst at S&P Capital IQ in New York.

“We are concerned about increasing wireless competition,” Moorman said today in a report.

Photographer: Patrick T. Fallon/Bloomberg

A T-Mobile US Inc. employee transfers data to a customer's new phone at a retail store in Torrance, California. Close

A T-Mobile US Inc. employee transfers data to a customer's new phone at a retail store... Read More

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Photographer: Patrick T. Fallon/Bloomberg

A T-Mobile US Inc. employee transfers data to a customer's new phone at a retail store in Torrance, California.

MetroPCS Merger

T-Mobile, which is about 74 percent owned by Deutsche Telekom AG, debuted on the New York Stock Exchange six months ago after merging with MetroPCS Communications Inc. The shares have gained more than 60 percent since then, boosted by subscriber gains at a company that long struggled to compete with Verizon Wireless and AT&T Inc. T-Mobile added 648,000 new monthly subscribers last quarter, topping the 401,000 average estimate of analysts.

Related: Dish’s Ergen Says T-Mobile Takeover Still ‘On the Table’

Even so, the company is losing money, hurt in part by lower prices. T-Mobile had a third-quarter net loss of $36 million, following a second-quarter net loss of $16 million. The company’s average phone bill for monthly subscribers shrank about 3 percent to $52.20 from the second quarter. Analysts had projected $52.86.

The new offering will dilute the value of current shareholders’ stakes. Investors responded by sending the stock down 3.3 percent to $26.09 at the close in New York.

Deutsche Telekom shares fell less than 1 percent to 11.15 euros in Frankfurt. The stock has gained 30 percent this year, valuing the Bonn-based carrier at almost 50 billion euros ($67 billion).

T-Mobile said it doesn’t plan to participate in the Federal Communications Commission’s planned auction of 1,900-megahertz spectrum. If its negotiations with the private party are successful, it expects to use some of the offering’s proceeds to pay for the airwaves.

To contact the reporter on this story: Nick Turner in New York at nturner7@bloomberg.net

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

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