T-Mobile’s CFO said that, thanks to the government’s recently passed tax reform legislation, the wireless operator now will enjoy a "massive explosion in cash" over the next 7-8 years—a figure he said could total around $7 billion.
"So, what are we going to do with all that cash? Well we're not going to go out and buy a big media company, that's for sure,” said T-Mobile’s Braxton Carter this morning during an investor event.
“When you look at how we've approached video, when you look at how we've approached content, we don't have any interest in owning that. We don't have any interest in developing it,” he explained. "Enabling that content to be curated by the consumer is really our approach.”
Carter acknowledged that T-Mobile recently purchased Layer3 TV for around $325 million in part to address the video market. He promised the “first phase” of that acquisition would be released sometime this year, and that “it’s not going to be a me too, OTT offering.” But Carter said T-Mobile would continue to look at similar “small” acquisitions.
“We're looking at tuck-in acquisitions that can strengthen certain of our other growth adjacencies that we're doing, but that's not going to be a material user of cash out there,” he said.
Carter also said that T-Mobile would use some of its cash to purchase additional spectrum—though he cautioned the carrier wouldn’t engage in any major purchases like the $8 billion it dropped on 600 MHz licenses during the FCC’s recent incentive auction of TV broadcasters’ unwanted spectrum.
“We'll certainly be a player in the government’s spectrum auctions coming up in 3.5 [GHz] and other things,” he said, noting that T-Mobile recently purchased millimeter-wave spectrum in Ohio. "There's not a lot of private transactions that you can really execute on. It's really these auctions. But we've been very clear publicly, it's not a spend like we did in the 600 MHz. That was a game changer.”
Concluded Carter on T-Mobile’s plans for spectrum purchases: “There's going to be a few billion dollars in spectrum acquisitions that are on the horizon.”
(Interestingly, Carter pointed to AT&T’s recent sale of its remaining 600 MHz licenses: "They certainly didn't talk to us about it, we would have paid more,” he said of AT&T’s 600 MHz sale. “But they probably didn't want to enable us.")
“What do we do with the rest of the cash?” Carter asked rhetorically. “Return to shareholders is a true reality.”
Carter explained that T-Mobile has already conducted a $1.5 billion share buyback effort, and said the carrier plans to expand that effort significantly over the coming years. "We're finalizing discussions with our board on a three-year capital allocation policy which will be a very significant buyback from the marketplace,” he said.
In other comments, Carter said that T-Mobile plans to engage on a several additional announcements this year.