T-Mobile Declares $4 Billion Sale Of Senior Secured Notes


T-Mobile US, Inc. (TMUS) has announced that its direct wholly-owned subsidiary T-Mobile USA has agreed to sell $4 billion of senior secured notes in a private offering.

This breaks down into $1,000,000,000 aggregate principal amount of its 1.500% Senior Secured Notes due 2026, $1,250,000,000 aggregate principal amount of its 2.050% Senior Secured Notes due 2028 and $1,750,000,000 aggregate principal amount of its 2.550% Senior Secured Notes due 2031.

The offering is scheduled to close on June 24, 2020, subject to customary closing conditions.

According to the statement, T-Mobile USA intends to use the net proceeds “for ongoing liability management, including the redemption of one or more series of existing T-Mobile USA unsecured notes that are subject to redemption without payment of a ‘‘make-whole’’ redemption premium.”

Shares in TMUS have rallied 35% year-to-date, and the stock scores a bullish Strong Buy consensus from the Street. The average analyst price target stands at $110. (See T-Mobile stock analysis on TipRanks).

RBC Capital’s Jonathan Atkin reiterated his buy rating on the stock while ramping up the price target from $94 to $110 following the 1Q- CY20 disclosure for both T-Mobile and Sprint.

“Though numerous moving pieces with the Sprint/ DISH transactions limit near-term visibility in estimates, we continue to view T-Mobile as favorably positioned through its value proposition and prospective network improvements with a strengthened spectrum portfolio” he cheered.

Despite the ongoing Covid-19 pandemic, Atkin notes that management sees potential upside to the magnitude and timing of its initial synergy guidance, which included run-rate synergies (pre-tax) of over $6B in 3-4 years.

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