Billionaire trader tells clients that Sprint or Dish could go after T-Mobile

Hedge Fund manager John Paulson is a successful investor who made $15 billion for his clients by being a bear in the subprime market in 2007. Paulson & Co.'s largest fund buys shares of companies involved in mergers and acquisitions. The $17 billion fund had held shares in MetroPCS prior to T-Mobile's purchase of the pre-paid carrier, which has now turned into a 2.3% stake in T-Mobile. Paulson plans on holding on to the stake because he sees T-Mobile as a potential target for other players in the industry. In a letter to clients, the money manager said that T-Mobile could end up being pursued by either Sprint or Dish Networks.


Paulson and Co. happens to be the third largest holder in Leap Wireless, which is being acquired by AT&T for $1.2 billion. That deal could lead some of the major carriers to take another look at consolidation. T-Mobile had been considered a possible buyer for Leap Wireless after seeing its stock rise 50% since May. That gives it a currency to use for acquisitions, and with Leap's shares continuing to trade above AT&T's bid of $15 a share, Wall Street is expecting another player to come into the deal with a higher price.

Meanwhile, Dish has been thwarted not once but twice in an effort to gain spectrum in order to start a new wireless carrier. Dish lost out to SoftBank after offering to buy Sprint for $25.5 billion, and was outbid by Sprint for Clearwire. Charles Ergen and his company should be seen as armed and dangerous in this game of consolidation in the mobile operator industry.

source: Bloomberg