T-Mobile to Issue $2 Billion in Bonds to Finance Spectrum Buying

The spectrum auction bidding that includes T-Mobile has 'quickly pushed far past reasonable levels,' Morningstar says.
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T-Mobile  (TMUS) - Get Report announced Monday that it’s issuing up to $2 billion in bonds, as the telecom titan seeks to purchase more spectrum amid the rollout of 5g.

“T-Mobile USA plans to offer, subject to market and other conditions, up to $2.0 billion aggregate principal amount of senior notes, to be issued in three tranches with maturities in 2026, 2029 and 2031 in a registered public offering,” the company said in a statement.

“T-Mobile USA intends to use the net proceeds from the offering of the notes for general corporate purposes, which may include among other things, financing acquisitions of additional spectrum and refinancing existing indebtedness on an ongoing basis," the company added.

T-Mobile had net debt of $61.5 billion as of June 30, according to Simply Wall St.

The company’s shares recently traded at $133.84, down 0.90%, and have soared 70% in the 12 months through Friday. Morningstar analyst Michael Hodel puts fair value at $108.

“Bidding in the FCC’s C-Band spectrum auction quickly pushed far past reasonable levels this week,” he wrote on Dec. 23, with gross bids roughly tripling since Dec. 18 to reach nearly $70 billion.”

Bottom line: “At this point, it’s anyone’s guess as to which actors have been driving prices higher and who will ultimately end up holding the bag,” Hodel said.

As for T-Mobile overall, its “strong brand and reputation for service quality, coupled with its industry-leading spectrum position, should enable the firm to steadily attract customers without resorting to aggressive promotional offers,” he said in November. But Hodel assigns it no moat amid heavy competition.