Telecom & Wireless
T-Mobile Wraps Asset Sale, Files for Debt Sale, Offers Mixed Guidance
Published:
Joining a parade of U.S. firms that are revisiting previously issued guidance for the second quarter, T-Mobile US Inc. (NASDAQ: TMUS) filed a report with the U.S. Securities and Exchange Commission (SEC) on Thursday related to the company’s second-quarter results.
T-Mobile expects to take a noncash, pretax impairment charge of approximately $418 million in connection with the company’s merger with Sprint. Another noncash, pretax charge of $800 million to $900 million is expected related to merger-related costs. That estimate is $300 million higher than a March estimate of $500 million to $600 million.
Now for some good news. Estimated costs related to the COVID-19 outbreak have been lowered by $100 million to a new range of $350 million to $450 million. The even better news is that T-Mobile now expects net postpaid (contract) customer additions of 800,000 to 900,000 in the second quarter. The previous estimate had called for postpaid net additions to fall in a range of zero to 150,000.
The company also announced that the U.S. Department of Justice has cleared the way for the sale of T-Mobile’s prepaid wireless business to Dish Network Corp. (NASDAQ: DISH). T-Mobile operated its prepaid business under three names: Boost Mobile, Virgin Mobile and Sprint. The sale is reportedly worth about $1.4 billion to T-Mobile. The sale is expected to close on July 1.
Finally, T-Mobile filed with the SEC to offer an unspecified amount of senior secured notes in a private placement to qualified institutional buyers through offshore transactions. The notes will not be registered and therefore may not be offered or sold in the United States.
T-Mobile said it plans to use the net proceeds for ongoing liability management, including the redemption of some existing unsecured notes that are subject to redemption without payment of a ‘‘make-whole’’ redemption premium. Given total long-term debt of nearly $35 billion, using the proceeds to pay off other debt is a good thing.
The company’s stock traded up about 3.6% in the noon hour Thursday, at $106.36 in a 52-week range of $63.50 to $106.72. The high was posted Wednesday. The consensus 12-month price target on the stock is $113.95. T-Mobile pays no dividend.
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.