T-Mobile US to propose significant share buyback

By Douglas Busvine

BARCELONA (Reuters) - T-Mobile US will propose a "significant" share buyback that could start in December, CFO Braxton Carter said on Thursday, a sign that the third biggest carrier in the United States is confident in its outlook after the collapse of a merger with Sprint Corp.

T-Mobile's shares have shed around 10 percent since the collapse of the Sprint merger, which promised estimated benefits of $40 billion. The buyback plan signals management's strong conviction on the business outlook to investors.

Carter, speaking at a Morgan Stanley TMT conference in Barcelona, said the buyback proposal would be put to the board this month. He said Deutsche Telekom, which owns around 64 percent in T-Mobile, would not tender shares and may even buy stock itself.

The issue of control was one of several deal-breakers in the T-Mobile-Sprint talks. By participating in a buyback Deutsche Telekom would concentrate its T-Mobile holding, strengthening its hand in any future merger talks.

Carter said he was "excited about the potential in a rational way to start returning cash to shareholders", citing T-Mobile's strong free cash flow and manageable debt levels.

T-Mobile had briefed credit ratings agencies on the buyback, he said. Moody's last week upgraded its rating on T-Mobile to Baa2 to reflect the company's strong performance and improved financial leverage. Carter said he expected S&P to follow suit.

The shares would be held in treasury and deployed as acquisition currency for future M&A, Carter also said, highlighting interest in targets in the so-called Internet of Things or regional players.

T-Mobile expressed confidence in its ability to grow as a standalone company, having invested $8 billion in 600 MHz spectrum that will position it to launch countrywide fifth-generation coverage by the turn of the decade.

"We are committed to roll out 5G across the nation by 2020," Chief Technology Officer Neville Ray also told the conference.

(Editing by Ludwig Burger and Jane Merriman)