$1 Billion for T-Mobile

Monday night, T-Mobile registered to offer 20 million shares of mandatory convertible preferred shares at $50/share that could result in equity dilution up to 4.5%, according to Colby Synesael at Cowen and Company. The company is looking to raise $1 billion. Synesael wrote in a research note that the firm wasn’t thrilled by the raise but understood why the company made the decision. T-Mobile recently acquired bands of 700MHz spectrum and the net proceeds from the stock will go towards general corporate purposes, including capital investments, and spectrum acquisitions unrelated to the AWS-3 auction. Synesael explains, “While T-Mobile’s CFO Braxton Carter had indicated at a recent investor conference in November that it might look to do an ‘equity linked’ deal to open up new capital markets for the company, we admittedly were not anticipating the level of implied dilution the preferred requires. As such, we aren’t thrilled by the raise but recognize the company’s recent 700 MHz spectrum acquisitions make sense (as do the potential for others) and that if it continues to execute as we expect the stock still offers material upside. It’s also worth noting that T-Mobile will be presenting at an investor conference on Wednesday at 10am ET and we expect further details at that time.”