NEW YORK Dec 5 MetroPCS Communications Inc
executives complained on Wednesday that the market is
undervaluing its shares ahead of the merger with planned
T-Mobile USA and too focused on whether or not Sprint Nextel
Corp would make a counterbid.
MetroPCS shares closed down 7 percent on Tuesday after
Reuters reported Sprint was unlikely to bid for MetroPCS, which
has already agreed to merge with T-Mobile USA, a unit of
Deutsche Telekom. The Reuters report late Monday
cited unnamed sources.
The week before, its shares spiked after analysts speculated
that Sprint would make a counteroffer.
"Everybody's focused on the interloper," MetroPCS Chief
Executive Roger Linquist told investors on the sidelines of a
UBS media and communications conference.
"It's a huge distraction," said Linquist, adding that
investors should instead focus on MetroPCS' fundamentals and the
value of the T-Mobile USA deal, which will bring "significant
opportunity for cash flow improvement."
Linquist declined to comment on whether or not MetroPCS has
been approached by Sprint, but noted the company would need to
examine any such offer.
The company's executives were peppered with questions at the
conference about whether they could provide more clarity on the
valuation of the T-Mobile USA deal. The tie-up is hard to
calculate because T-Mobile USA is not a publicly traded company.
"We think we're trading at the very low end of the range,"
MetroPCS Chief Financial Officer Braxton Carter told the
conference, without providing a valuation range for the deal.
MetroPCS shares traded up 0.6 percent at $10.01 on New York
Stock on Wednesday. The stock, which closed at $10.77 on Monday
before the report about Sprint, has been volatile since the
T-Mobile USA deal was announced on Oct. 3.
Several hedge fund investors told Reuters the lower share
price suggested the market now sees only a 10 percent to 15
percent probability of a rival bid. Last week that probability
was at 50 percent to 60 percent, said the investors, who asked
not to be named.
Asked about the likelihood of an eventual combination of
Sprint, MetroPCS and T-Mobile USA, Linquist said he expects more
consolidation in the U.S. wireless market.
"It has to happen at some point, in my view," Linquist said,
noting it was necessarily for the health of the industry,
"Consolidation of the industry needs to occur."
But he said that could take five to ten years.