Cowen Sees Possible T-Mobile US (TMUS) Bidding War, With Comcast (CMCSA) and Others Interested

Cowen analyst Colby Synesael weighed in on news DISH Network (NASDAQ: DISH) and T-Mobile US, (NYSE: TMUS) are in merger talks, saying while timing would not be ideal they believe other parties could also be interested which could drive a bidding war.

Synesael thinks cable MSO’s including Comcast (NASDAQ: CMCSA) could revisit strategic options and also make an offer for T-Mobile. In addition, other players who could also be interested include international players such as Altice which recently announced a deal to buy Suddenlink and Liberty Global (NASDAQ: LBTYA) and to a lesser degree Internet players such as Google (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT).

On price, the analyst notes their DCF-derived price target is $43, however they include a 10% public/private discount which excluding implies a price target of $47. They also said it is worth noting VZ purchased its remaining portion from Vodafone for 8.4x FTM 2015, and one could argue while a subscale network the scarcity of assets and ongoing strategic alternatives by cable MSO's could fetch a similar valuation. Also, they note that Dish would likely want to use stock as part of the deal, however this could be a point of contention considering DT’s desire to exit or meaningfully reduce its exposure as well as the fact that Dish’s own stock is up 22% since its October 2014 lows bolstered by the valuation from AWS-3 which one can argue was self-driven and thus less genuine.

The firm sees regulatory hurdles as a non-issue.

The firm maintained an Outperform rating and price target of $43 on TMUS.

For an analyst ratings summary and ratings history on T-Mobile US, click here. For more ratings news on T-Mobile US, click here.

Shares of T-Mobile US, closed at $38.33 yesterday.

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