April 29, 2018
Board of Directors
T-Mobile US, Inc.
12920 SE 38th Street
Bellevue, WA 98006
Members of the Board:
We understand that T-Mobile US, Inc. (the “Company”) proposes to enter into a Business Combination Agreement (the “Agreement”) with Sprint Corporation (“Sprint”) and certain other parties thereto, pursuant to which, among other things, the Company and Sprint will effect a business combination transaction and each issued and outstanding share of the common stock, par value $0.01 per share, of Sprint (the “Sprint Common Stock”) (subject to certain exceptions set forth in the Agreement), will be automatically converted into the right to receive 0.10256 (the “Exchange Ratio”) shares of the common stock, par value $0.00001 per share, of the Company (the “Company Common Stock”), on the terms and conditions set forth in the Agreement. We further understand that in connection with the transactions contemplated by the Agreement (collectively, the “Transaction”), the Company, Sprint and/or certain of their affiliates will enter into certain other agreements as provided in the Agreement.
You have asked us whether, in our opinion, as of the date hereof, the Exchange Ratio pursuant to the Agreement is fair to the Company from a financial point of view. In arriving at the opinion set forth below, we have, among other things:
| (i) | reviewed certain publicly available information concerning the business, financial condition and operations of Sprint and the Company; |
| (ii) | reviewed certain internal information concerning the business, financial condition and operations of Sprint and the Company prepared by the management of Sprint and the Company, respectively, and approved for our use and furnished to us by the management of the Company; |
| (iii) | reviewed certain internal financial analyses, estimates and forecasts relating to the Company, including projections for the Company’s fiscal years 2018 through 2026, that were prepared by or at the direction of and approved and furnished to us by the management of the Company (the “Company Projections”); |
| (iv) | reviewed certain financial analyses, estimates and forecasts relating to Sprint, including (a) projections for calendar years 2018 through 2022 that were prepared by the management of Sprint and approved for our use and furnished to us by the management of the Company (the “Sprint Projections”) and (b) projections for calendar years 2018 through 2026 that were prepared by or at the direction of and approved and furnished to us by the management of the Company (the “Company Management Sprint Projections”); |
| (v) | reviewed certain financial analyses, estimates and forecasts relating to the combined company, including projections for calendar years 2019 through 2026 that were prepared by or at the direction |
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| of and approved and furnished to us by the management of the Company (the “Combined Company Projections”, and, together with the Company Projections, the Sprint Projections and the Company Management Sprint Projections, collectively, the “Projections”); |
| (vi) | held discussions with members of senior management of the Company concerning, among other things, their respective evaluations of the Transaction and the Company’s and Sprint’s respective businesses, operating and regulatory environment, financial condition, prospects and strategic objectives; |
| (vii) | reviewed the expectations of the management of the Company with respect to the pro forma impact of the Transaction on the future financial performance of the combined company, including operating cost synergies, capital expenditure savings and other combination benefits of the transaction and the related costs to achieve such savings and combination benefits (collectively, the “Expected Synergies”), and other strategic benefits expected by the management of the Company to result from the Transaction; |
| (viii) | reviewed the net operating loss projections for the Company, Sprint and the combined company that were prepared by or at the direction of and approved and furnished to us by the management of the Company (the “NOL Projections”); |
| (ix) | reviewed certain estimates relating to the capitalization of Sprint, the Company and the combined company as of March 31, 2018 and December 31, 2018 that were prepared by the management of Sprint or the Company, as applicable, and approved for our use and furnished to us by the management of the Company (with respect to the estimates relating to the capitalization of Sprint, the Company and the combined company as of December 31, 2018, the “Expected Capitalization”); |
| (x) | reviewed certain estimates relating to transaction and financing fees and expenses to be incurred in connection with the Transaction that were prepared by and approved for our use and furnished to us by the management of the Company (the “Expected Transaction Expenses”); |
| (xi) | compared certain financial information for Sprint and the Company with similar publicly available financial and stock market data for certain other companies that we deemed to be relevant; |
| (xii) | reviewed the publicly available financial terms of certain other business combinations that we deemed to be relevant; |
| (xiii) | reviewed an executed copy of the Agreement, dated as of April 29, 2018; and |
| (xiv) | performed such other financial studies, analyses and investigations, and considered such other matters, as we deemed necessary or appropriate for purposes of rendering this opinion. |
In preparing this opinion, with your consent, we have relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by us, without independent verification thereof. We have assumed, with your consent, that the Projections and the Expected Capitalization and the underlying assumptions therefor, and all other financial analyses, estimates and forecasts provided to us by the Company’s or Sprint’s management, have been reasonably prepared in accordance with industry practice and represent the Company or Sprint, as applicable, management’s best currently available estimates and judgments as to the business, financial condition and operations and future financial performance of the Company, Sprint and/or the combined company, as applicable. We have assumed, with your consent, that the amounts and timing of the Expected Synergies are reasonable and that the Expected Synergies will be realized in accordance with such estimates, and estimates of the tax effects set forth in the NOL Projections are reasonable and that the net operating losses described therein will be utilized in accordance with such estimates. We have also assumed, at your direction, that for purposes of our analysis the Expected Transaction Expenses represent the aggregate amount of transaction and financing fees and expenses that will be incurred in connection with the Transaction.
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With your consent, we assume no responsibility for and express no opinion as to any of the Projections, the Expected Synergies, the NOL Projections, the Expected Capitalization or the Expected Transaction Expenses, the assumptions upon which any of the foregoing are based or any other financial analyses, estimates and forecasts provided to us by the management of the Company or Sprint. We have also assumed that there have been no material changes in the assets, financial condition, results of operations, business or prospects of each of the Company and Sprint since the respective dates of the last financial statements made available to us. We have further relied, with your consent, upon the assurances of the management of the Company that they are not aware of any facts that would make the information and projections provided by them inaccurate, incomplete or misleading.
We have not been asked to undertake, and have not undertaken, an independent verification of any information provided to or reviewed by us, nor have we been furnished with any such verification and we do not assume any responsibility or liability for the accuracy or completeness thereof. We did not conduct a physical inspection of any of the properties or assets of the Company or Sprint. We did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of the Company or Sprint, nor have we been furnished with any such evaluations or appraisals, nor have we evaluated the solvency of the Company or Sprint (or the impact of the Transaction thereon) under any applicable laws.
We also have assumed, with your consent, that the consummation of the Transaction will be effected in accordance with the terms and conditions of the Agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise, including any consent or waiver under the Company’s, Sprint’s or any of their affiliates’ debt instruments or securities) for the Transaction and related transactions, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company or the contemplated benefits of the Transaction in any way that would affect our analysis. We have assumed, with your consent, that the Transaction will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986. We do not express any opinion as to any tax or other consequences that might result from the Transaction, nor does our opinion address any legal, tax, regulatory or accounting matters, as to which we understand that the Company obtained such advice as it deemed necessary from qualified professionals. We are not legal, tax or regulatory advisors and have relied, with your consent, upon without independent verification the assessment of the Company and its legal, tax and regulatory advisors with respect to such matters.
We have not considered the relative merits of the Transaction as compared to any other business plan or opportunity that might be available to the Company or the effect of any other arrangement in which the Company might engage and our opinion does not address the underlying decision by the Company to engage in the Transaction. Our opinion is limited to the fairness as of the date hereof, from a financial point of view, to the Company of the Exchange Ratio pursuant to the Agreement, and our opinion does not address any other aspect or implication of the Transaction, the Agreement, or any other agreement or understanding entered into or to be entered into in connection with the Transaction or otherwise. We further express no opinion or view as to the fairness of the Transaction or any related transaction to the holders of any class of securities, creditors or other constituencies of any party, including, without limitation, the treatment of any debt provided by Deutsche Telekom AG (“DT”) to the Company in connection with the Transaction, or as to the underlying decision by the Company to engage in the Transaction. We also express no opinion as to the fairness (financial or otherwise) of the amount or nature of the compensation to any officers, directors or employees, or any class of such persons or any party to the Transaction, whether relative to the Exchange Ratio or otherwise. This opinion does not constitute a recommendation to any stockholder of the Company or Sprint as to how any such stockholder should vote or act with respect to the Transaction or any other matter.
Our opinion is necessarily based upon economic, market, monetary, regulatory and other conditions as they exist and can be evaluated, and the information made available to us, as of the date hereof. We express no opinion as to the prices or trading ranges at which the shares of the Company Common Stock or Sprint Common Stock will
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trade at any time. We assume no responsibility for updating or revising our opinion based on circumstances or events occurring after the date hereof. This opinion has been approved by a fairness committee of PJT Partners LP in accordance with established procedures.
This opinion is provided to the Board of Directors of the Company, in its capacity as such, in connection with and for the purposes of its evaluation of the Transaction only and is not a recommendation as to any action the Board of Directors should take with respect to the Transaction or related transactions or any aspect thereof. This opinion is not to be quoted, summarized, paraphrased or excerpted, in whole or in part, in any registration statement, prospectus or proxy or information statement, or in any other report, document, release or other written or oral communication prepared, issued or transmitted by the Board of Directors, including any committee thereof, or the Company, without our prior written consent. However a copy of this opinion may be included, in its entirety, as an exhibit to any disclosure document the Company is required to file with the U.S. Securities and Exchange Commission in connection with the Transaction without the prior written consent of PJT Partners LP. Any summary of or reference to the opinion or the analysis performed by PJT Partners LP in connection with the rendering of the opinion in such documents shall require the prior written approval of PJT Partners LP.
We are acting as financial advisor to the Company with respect to the Transaction and will receive a fee from the Company for our services, a significant portion of which is payable upon the consummation of the Transaction. In addition, the Company has agreed to reimburse us for out-of-pocket expenses and to indemnify us for certain liabilities arising out of the performance of such services (including the rendering of this opinion).
In the ordinary course of our and our affiliates’ businesses, we and our affiliates may provide investment banking and other financial services to the Company, Sprint or their respective affiliates and may receive compensation for the rendering of these services. During the two years preceding the date of this opinion, we and certain of our affiliated entities are advising or have advised (i) the Company’s Audit Committee in connection with certain financings by DT, for which we have received customary compensation, (ii) Softbank Group Corp. (“Softbank”) in connection with an investment unrelated to the Transaction, for which we have received customary compensation, (iii) OneWeb, in which Softbank owns a non-controlling equity stake, in connection with a potential transaction unrelated to the Transaction, for which we may in the future receive customary compensation, and (iv) Ligado Networks LLC, in which Fortress Investment Group LLC, which has become a subsidiary of Softbank subsequent to our mandate, owns a significant investment, on matters unrelated to the Transaction, for which we may in the future receive customary compensation.
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Based on and subject to the foregoing, we are of the opinion, as investment bankers, that, as of the date hereof, the Exchange Ratio pursuant to the Agreement is fair to the Company from a financial point of view.
| Very truly yours, |
| /s/ PJT Partners LP |
| PJT Partners LP |
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