The bid for T-Mobile US Inc (NYSE:TMUS) coming from Iliad SA is “definitely out of left field” according to Michael McCormack in an interview on Bloomberg’s Taking Stock.
The comment about T-Mobile US Inc (NYSE:TMUS) and Iliad SA comes from the Jefferies LLC equity analyst after the French company revealed that it has bid $15 billion in cash to buy 56.6% of the U.S. carrier.
Asked whether T-Mobile US Inc (NYSE:TMUS) needs capital on hand in light of the coming spectrum auction by the United States Federal Communications Commission in 2015, McCormack said the company is hampered at the moment when looking at the situation from a cash flow perspective.
“It’s a good question. A lot of people question why not [raise cash]organically. They have been doing a great job taking share. Sprint [Sprint Corporation (NYSE:S)] has been a donor for the entire industry. Can they go [at it]alone or do they need more? From a cash flow perspective, they are sort of hampered right now, given some of the plans out there, and the spectrum auction is coming up. So, I think they are looking at different ways to bulk up in the spectrum side which requires cash,” he explained.
However, he noted that the bid from the upstart Iliad SA for T-Mobile US Inc (NYSE:TMUS) was not really expected by the industry’s observers.
“[The bid] definitely came out of left field today. There are multiple other discussions in the marketplace, Sprint [obviously]being top of the list. But, there have been other things like potentially Carlos Slim coming from AMX [America Movil SAB de CV (ADR) (NYSE:AMX)] as a potential suitor as well. DISH [DISH Network Corp (NASDAQ:DISH)] with Charlie Ergen coming in with a spectrum position to help them bulk up and become a bigger player in the marketplace. This [bid from Iliad SA]was clearly out of left field,” he said.
Watch a lot more of the discussion about T-Mobile US Inc (NYSE:TMUS) below.