T-Mobile said today it will need to raise more debt if it wants to participate in a crucial upcoming wireless auction.
“We intend to participate in the FCC’s upcoming auction of AWS-3 spectrum, and if we are successful in the auction process, we anticipate that a portion of the net proceeds of this offering would be used to acquire such spectrum,” the company said in a filing with the Securities & Exchange Commission.
The Bellevue-based carrier, which is the fourth largest in the U.S., did not disclose how much money it intends on raising from the public markets, and cautioned that proceeds could go toward any number of general corporate purposes. However, if it does participate in the wireless auction, which is essential to maintaining a competitive 4G network, it could require a healthy sum. The Federal Communications Commission, which will host the auction in November, has set the minimum reserve price at $10 billion.
T-Mobile is already burdened by a substantial amount of debt, and in recent months, has been entertaining buy-out offers as a way to strengthen its financial position.
As of the end of June, it had $3 million in cash and debt of $22.7 million. By raising debt the company may be able to buy itself some time as an independent company.
Over the past year, it has been successful at signing up new subscribers, by promising easy-to-understand and low-cost plans. Total revenues for the six months ended in June were $14 billion, up from only $10.9 billion in the same period a year earlier.
Of course, T-Mobile isn’t the only one interested in participating in the auction. Other carriers likely to bid include Verizon Wireless, AT&T, and many smaller carriers.
Regardless of how much debt it is able to raise, the company could still be sold or merged with another entity, a fact that T-Mobile acknowledged in a separate SEC document filed today. On Monday, Iliad, the little-known French telecom company that made an out-of-the-blue bid for the company this summer, said it was trying to find a way to make its offer stronger, including talks with other investors.
“On September 1, 2014, Iliad S.A. stated publicly that it remains interested in a transaction with us and that it is in discussions with several potential partners regarding a potential transaction,” T-Mobile said, in the filing. “We cannot at this time predict whether Iliad S.A. and/or others will make any new or further proposal for a transaction with us or what the outcome of any such proposal would be. We cannot rule out the possibility that Iliad S.A or another party could submit a new or improved offer that would lead to negotiations and possibly to an agreed transaction.”
The carrier has a press conference scheduled for Sept. 10 in San Francisco, where it plans to unveil its latest “Un-carrier” moves. The tagline for this mysterious event is “This time it’s personal.”
