T-Mobile's Legere puts AT&T, Verizon on notice about potential tie-up with Sprint

T-Mobile US (NYSE:TMUS) CEO John Legere again intimated that the carrier would benefit through larger scale, likely via a merger with Sprint (NYSE: S), and served warning to the company's larger competitors about a potential deal.

In a wide-ranging interview with Business Insider, Legere said that a combined T-Mobile and Sprint would be very different than what would have happened if AT&T (NYSE: T) had bought T-Mobile in 2011. That deal was primarily about enhancing AT&T's spectrum position. A deal now between Sprint and T-Mobile would presumably retain both T-Mobile's management team and T-Mobile's "uncarrier" brand.

"If you took T-Mobile and gave it a huge amount of spectrum and the economic wherewithal and the scale to take on what we're doing, if I was AT&T or Verizon," I would be worried, Legere said, though he used a more profane version of that sentiment.

Sprint parent SoftBank and T-Mobile parent Deutsche Telekom are reportedly inching toward a deal, with DT willing to keep a minority stake in T-Mobile in a deal to sell T-Mobile to SoftBank, according to a Reuters report from last week. According to the report, which cited unnamed sources, much still needs to be worked out in the deal, including the price and financing. DT could keep a stake of around 15 percent in T-Mobile as part of a deal, which would cut down on the amount that SoftBank would need to pay while giving DT the benefit of synergies, the report said.

Regulators at the FCC and Department of Justice have expressed skepticism of a deal, but SoftBank CEO Masayoshi Son has been undeterred.

In the interview, Legere talked about his strategy and his brashness, unconventional style and bold moves to shake up the industry. In the first quarter of 2014, T-Mobile added 2.4 million total customers, including 1.3 million branded postpaid customers, the most of any U.S. carrier. However, that came at a cost--T-Mobile swung to a net loss of $151 million for the first quarter, down from a profit of $107 million in the year-ago period. The company reported adjusted EBITDA of $1.09 billion for the first quarter, down 26 percent from $1.47 billion a year earlier, including earnings from MetroPCS before the companies merged last year.

Some analysts and investors have argued that Legere and his team are simply priming T-Mobile for a takeover, but Legere insisted he and his team are running the company for the long-term. "From a standpoint of what we set out to do at three-year growth targets, we're ahead," Legere said. "So there is gold in our hills. From the standpoint of this turning into significant operating cash flow, we're dead on track."

T-Mobile plans to unveil its "uncarrier 5.0" announcement on June 18 at an event in Los Angeles, and Legere said the carrier has at least "two or three more" uncarrier movies are coming after that.

"People always think we're going to announce highly elaborate things," he said. "I'll tell you that when we announce what we're going to do next, it's going to be right in front of you. They're the most obvious, right-in-front-of-your-face things that when we do them, it's highly elegant and it works."

For more:
- see this Business Insider article

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Article updated June 2 to indicate that T-Mobile's management team would presumably be kept in a Sprint/T-Mobile merger.

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