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Top message:  Join Suncom? by Snuggles   Feb 27, 2007, 9:13 PM

Replying to:  Why not to join SunCom by SprintLynchburg_VA   Feb 28, 2007, 1:08 AM

Re: Why not to join SunCom

by nextel18    Mar 11, 2007, 6:12 AM

Unfortunately, not many bigger companies like T-mobile USA or Cingular will be interested in a Suncom type of company because of its debt-load, negative cash flows, and its inconsistency at revenue and subscriber growth. If their management can turn it around, then they would be more attractive to Cingular or T-mobile USA or any other type of company who is trying to go in Suncom’s areas. Granted, Suncom does have very nice assets, but they continue to seek negative ROICs so why would anyone buy them? If a company like Cingular or T-mobile USA does indeed buy Suncom, they need to get rid of all of Suncom’s management, board, employees, and business and operational strategies and implement their own. Especially since at a price tag for Suncom at about $2.3B if you take their 1.1 million subscribers level and multiply it by $2300 per subscriber, which have been most recent acquisition calculations. Suncom also has $1.6B of long-term debt, which is too much of a company of their size.

If they get their situation in order from operationally to financially turned around then there would be a buyer, but until then, no one would bite on a company like this because what they would do is wait for Suncom’s bondholders to force the company into a chapter 11 restructure plan, and then purchase Suncom at $.50 on the $1. No point of spending full price for a failed business and operational strategy when they can pay a fraction of that price.

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