MetroPCS Files Investor Presentation

Mon Mar 18, 2013 7:08am EDT

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

* 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:

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

* 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.


* 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:

* 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

* 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 value2  projected cost synergies are achieved.

* 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:

* 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;  
* Increased Size and Scale:  The combined company will be well-positioned
competitively with significant spectrum holdings, deep nationwide network
coverage and more network capacity;  
* Significant Synergies:  The combined company will benefit from projected cost
synergies of  $6-7 billion  net present value;2  and  
* 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.

* 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:

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

* 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:

* Allow the combined company to extend the MetroPCS brand into unserved and
underserved major metro areas;  
* Facilitate the offering of a broad product portfolio, including Apple devices;
 
* Generate substantial additional growth in the fast-growing no contract space;
and  
* 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.

* 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:

* 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
* Target EBITDA margins of 34% to 36% at the end of the five-year period (from
2012 to 2017); and  
* 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.

* 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:


* Misperception #1: Leverage is too high.

* 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 Rating8              
 
Based on LTM EBITDA                                                 
                  Leap  PF Sprint9  NewCo  MetroPCS  T-Mobile10  
 Gross  Leverage  5.5x  5.5x        3.6x   3.1x      3.6x        
 Net Leverage     4.4x  3.0x        3.4x   2.4x11    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.

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

* 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.

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

* 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.

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

* 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  5.0x1       5.0x1        
 2013E EBITDA                                  $1,35912    $5,13213     
 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 Split18       
                                                            NewCo     MetroPCS       
                                                            Proxy     Stand-Alone    
                                                            
Math15   
Math          
 Firm Value/EBITDA1                                         5.0x      5.0x           
 2013E Pro Forma EBITDA                                     $6,4914   $1,35912       
 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 Stockholders      $4.06     --             
 Total Value to MetroPCS' Stockholders                      $11.76    $8.51          
 Premium/(Discount) to MetroPCS Standalone Value16          38%       --             
 Plus: NPV of Synergies per Share17                         $4.71     --             
 Total Value to MetroPCS' Stockholders Including Synergies  $16.47    $8.51*         
 Premium/(Discount) to MetroPCS Standalone Value16          93%       --             
 *(18%) discount to current MetroPCS share price1                                      


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  NPV2  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.

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