T-Mobile CEO: No Comment On M&A Speculation; 1Q Results Strong

Date : 05/10/2012 @ 11:47AM
Source : Dow Jones News
Stock : Metropcs Comm. Dl-,0001 (PCS)
Quote : 11.84  0.0 (0.00%) @ 2:05AM

T-Mobile CEO: No Comment On M&A Speculation; 1Q Results Strong

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The chief executive of T-Mobile USA said he won't comment on merger speculation and said the wireless carrier is focused on making its business stronger.

Bloomberg reported Wednesday that T-Mobile parent company Deutsche Telekom AG (DTEGY, DTE.XE) is in talks with Metro PCS Communications Inc. (PCS) about merging with T-Mobile. The two mobile providers would be combined in a separate, publicly traded company, controlled by the German giant, according to the report.

T-Mobile CEO Philipp Humm said Thursday the company won't comment on speculation and that it has no news to tell. He reiterated that Deutsche Telekom and T-Mobile are working to strengthen the T-Mobile business and evolve T-Mobile to become a "self-funding platform."

"That's still the strategy we're pursuing," he said during a call discussing the company's first-quarter earnings.

The speculation comes months after AT&T Inc.'s (T) proposed $39 billion acquisition of T-Mobile failed due to antitrust concerns. Other possible tie-ups have also been mentioned in recent months, with many players in the U.S. mobile industry listed as possible partners. The carriers say they're facing a shortage of wireless airways, or spectrum, something that's causing them to seek out deals with other companies.

Verizon Wireless, a joint venture of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD, VOD.LN), disclosed agreements in December to buy rights to the spectrum of four of the nation's cable providers for a total of about $3.9 billion. T-Mobile and MetroPCS have pushed regulators to block Verizon's plan.

Verizon last month said it would conduct an open sale process for all of its 700 megahertz A and B spectrum licenses as it looks to deploy its 4G LTE network on upper C spectrum licenses.

Humm said Thursday the airwaves being sold by Verizon Wireless aren't really interesting to T-Mobile because of some issues the spectrum faces, such as interference with certain TV stations.

"It doesn't address the issue, which is that with cable, Verizon will have a lot of very, very good [advanced wireless services] spectrum," Humm said. "There is a need for divestitures from that point of view on spectrum."

T-Mobile last year shed customers and put its strategic plans on hold in anticipation of being taken over by AT&T in what became a failed bid for the fourth-largest U.S. carrier. Lacking the popular Apple Inc. (AAPL) iPhone, T-Mobile last year saw 1.65 million contract customers leave its network and is only now embarking on an upgrade of its network to offer the high-speed mobile broadband known as 4G LTE.

The Bellevue, Wash.-based carrier is revising its marketing to emphasize the value of its data and voice plans and recently recast its pink-clad model spokeswoman to project a tougher image, including a tight-fitting leather motorcycle outfit.

T-Mobile said Thursday it lost 510,000 branded contract customers in the first quarter, an improvement from the 706,000 loss in the year-earlier period and 574,000 in the fourth quarter.

"It's clear such contract losses are not sustainable," Humm said. "We'll continue to work hard to...get the contract customer base back to growth."

He declined to provide a specific target for a return to growth but said it should occur sometime in 2013 or 2014.

T-Mobile overall performed much better than expected in the first quarter, raising its operating profit by almost 13%. That was due to lower costs such as handset subsidies, it said.

"T-Mobile delivered solid year-over-year improvement in [the first quarter] across all metrics, giving us headroom to invest in the business in the second half of the year," Humm said Thursday.

Meanwhile, Deutsche Telekom reported stable first-quarter operating profit Thursday after the better-than-expected performance at T-Mobile, and it said it remains on track to meet its outlook for the full year.

-By Shara Tibken, Dow Jones Newswires; 212-416-2189; shara.tibken@dowjones.com

--Philipp Grontzki contributed to this article.

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