The most compelling narrative involves "Company G," which is widely read to be Sprint Nextel Corp. and has raised the question whether the carrier would make a bid for MetroPCS. There are also strategic implications for Leap Wireless International Inc. and Clearwire Corp.
Aside from T-Mobile USA and MetroPCS, the proxy refers to companies generically. Sprint, however, which declined to comment on its interest in MetroPCS, matches the description of Company G.
For instance, a senior MetroPCS executive reached out to a colleague at Company G on Aug. 14 to discuss the person's "publicly announced impending departure," the proxy states. The date would coincide with Sprint's announcement, earlier in August, that its head of strategic planning, Keith Cowan, was to leave the company.
Moreover, in October an executive from Company G indicated that it was about to receive a "large new investment of capital," which would dovetail with the announcement of Softbank Corp.'s $20 billion investment in Sprint.
An inquiry in October, just before MetroPCS and T-Mobile USA announced their deal, has raised speculation that Sprint might renew its pursuit.
An executive from Company G reached out to MetroPCS regarding reports of a deal with T-Mobile USA. The person said he "hoped such a transaction would not occur," and that "any breakup fee payable by MetroPCS to pursue an alternative transaction would be reasonable."
The breakup fee, of $150 million, would not seem to be prohibitive to Sprint, especially with its new backing from Softbank.
Shing Yin of Guggenheim Securities LLC discounts the likelihood that Sprint will lodge a bid.
"It's clear that MetroPCS and Sprint had been talking for a long time -- more than a year," he said. "If Sprint and Softbank were interested," he added, "they could have done something."
MetroPCS may have been a plan B if the Softbank transaction didn't come together.
However, Wells Fargo Securities LLC analyst Jennifer Fritzsche suggested in a Monday, Nov. 19, note that "it could get really interesting," with Sprint's new backing and invigorated stock price.
Sprint's board may have been dissuaded from making a deal in February 2012 because of its lagging equity value.
"While no explanation was given in the proxy, we believe a large driver here was the fact that Sprint's equity was very much depressed and the board was reluctant to use it as currency in such a transaction," Fritzsche wrote, noting that the stock has since climbed 146%.
The proxy's description of Company E has brought attention to Leap, which gained 36 cents, or more than 6%, to $6.33 on Monday.
T-Mobile USA and MetroPCS had more than one discussion about including Company E in their merger.
Yin suggested that the carriers could move for Leap after wrapping up their deal. They would have a stronger bargaining position in talks with Leap after the transaction had closed.
Because of Leap's high leverage, the company's market cap of about $493 million is a small portion of its $3.2 billion enterprise value.
Yin suggested that T-Mobile USA and MetroPCS make an offer that included a 40% to 50% premium for Leap's equity without greatly inflating the total value of the deal.
While it is necessary to read between the lines of the MetroPCS proxy, the document indicates the wide range of companies that are aggressively seeking wireless scale and spectrum. MetroPCS even fielded an offer from Dish Network Corp., demonstrating the seriousness with which Charlie Ergen views the wireless market.
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