There are currently no offers to buy T-Mobile US (NYSE:TMUS) that are worth more to its parent Deutsche Telekom than the current value of the carrier as a standalone business, according to DT CEO Timotheus Höttges.
The comments come after reports that Sprint (NYSE: S) and its parent SoftBank abandoned pursuit of a deal with T-Mobile because of regulatory concerns. They also come as DT is evaluating a $15 billion offer from French carrier Iliad for 56.6 percent of T-Mobile; reports have said DT thinks that offer is too low.
"We're open to a transaction that creates value for all T-Mobile US shareholders, compared with continuing the business on its own," Höttges said on Deutsche Telekom's earnings conference call, according to Bloomberg. "Right now, there's no such offer on the table."
Iliad has said it could raise its offer, but now that T-Mobile's possible merger with Sprint is off the table, it does not see a need to do so, according to the Wall Street Journal, which cited an unnamed source familiar with the matter.
However, DT still views Iliad's bid for T-Mobile as too low, as evidenced by Höttges' comments.
Still lurking as a potential suitor or partner is Dish Network (NASDAQ: DISH) and its Chairman Charlie Ergen. Reuters reported this week that Iliad is working with Dish, Cox Communications, Charter Communications (NASDAQ: CHTR) and others to improve its offer for T-Mobile.
"If people are going to help us and if a business deal makes sense, then that's something we'd consider," Ergen said on Dish's quarterly earnings call, according to a Seeking Alpha transcript. The comments potentially--but not expressly--reference a teaming with Iliad.
Regulators seemed pleased that a Sprint/T-Mobile deal fell through; for months the FCC and Department of Justice made clear they were opposed to further consolidation among the Tier 1 carriers. "Four national wireless providers is good for American consumers," FCC Chairman Tom Wheeler said in a statement. "Sprint now has an opportunity to focus their efforts on robust competition."
However, Höttges said that a drop Wednesday in Sprint and T-Mobile's share prices "couldn't have been a clearer signal" that such thinking damages the smaller operators, according to Bloomberg.
Now, the biggest opportunity for both T-Mobile and Sprint are the spectrum auctions the FCC will conduct over the next year. First is the AWS-3 auction, which starts in November, and then the incentive auction of 600 MHz broadcast TV spectrum, scheduled for mid-2015.
Although there are no bidding restrictions in the AWS-3 auction, which is focused on mid-band spectrum, the FCC has approved rules that would set aside up to 30 MHz of spectrum in a given market for Sprint, T-Mobile and other smaller carriers to bid on.
According to Bloomberg, Höttges reiterated that Sprint and T-Mobile need help from regulators in the incentive auction because they do not have the financial firepower of AT&T Mobility (NYSE: T) and Verizon Wireless (NYSE: VZ).
The incentive auction will be crucial to both Sprint and T-Mobile because of the strong propagation characteristics of 600 MHz spectrum. Both carriers want the airwaves to help expand their network coverage footprints to match those of Verizon and AT&T, which have used low-band 700 MHz spectrum they acquired at auction in 2008 for their macro LTE deployments.
Dish's Ergen: Collapse of Sprint/T-Mobile talks 'increases' our wireless options
Sprint officially names Claure to replace Hesse as CEO
Rumor mill: Iliad working with Dish, Cox, Charter and others to improve T-Mobile bid
Analysts: The benefits of an Iliad/T-Mobile deal are hard to see
Analysis: Iliad's $15B bid for control of T-Mobile puts pressure on SoftBank, Sprint to make a deal
France's Iliad makes $15B bid to purchase majority of T-Mobile US
T-Mobile's Legere: We don't need to make a deal to be successful
Correction, Aug. 7, 2014: Due to an editing error, this article misstated the value of Iliad's offer to T-Mobile US. It was $15 billion, not $1 billion.