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MetroPCS Communications, Inc. Message Board

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  • mindekei mindekei Oct 3, 2012 12:24 PM Flag

    Valuation of New Company - MetroPCS + Tmobile USA

    Isn't Tmobile valued at 1/4th DT? DT market cap is approx. 42B, so Tmobile should be worth 10.5B.

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    • Deutsche Telekom AG has a current market cap of $54 billion USD. The $42.2 B is in Euro.

      Tmobile USA is said to contribute about 25% of DT's total income, not valuation. However, we could also try to use the EBITDA valuation, Tmobile/MetroPCS combined ttm EBITDA is about $7.9 Billion, using MetroPCS' current 3.26x market cap/EBITDA multiple, the new company should worth about $25.7 billion. (VZ has a 4.26x and AT&T has a 6.22x MC/EBITDA multiple for comparison's sake)

      Personally, I wouldn't use any Sprint's multiple to value the new Tmobile/MetroPCS company, because Sprint hasn't make a dime for so many years.

      • 3 Replies to cc012013
      • No, this is not a Sprint/Nextel remake, the situation is totally different. One biggest difference is when they merged in 2005, there is no smart phone and there is no LTE, which every wireless company now is intergrating as the foundation of their future.

        With that said, it takes about 6-9 months to get this merger to be approved (if Sprint don't step in) and by that time, MetroPCS already finish its LTE launch in majority of its markets, this alone could improve the margin tremendously. Not to mention this would also speedup Tmobile's LTE intergration by nearly a year. Such opportunities set them up very well to introduce "Iphone 6" in Sep/Oct 2013.

      • Personally, you have to use Sprint's multiple because when TM and PCS start the integration process, they're margins are going to suffer just like Sprint Nextel.

        There's a reason why Sprint can't turn a profit, and that will be why the market won't value at T and VZ multiple.

        Sentiment: Sell

      • Also, I never value Tmobile/MetroPCS with a VZ or T multiple, I was using the current MetroPCS multiples to come up with the $20/share estimate.

 

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