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French telecom giant Free bids for T-Mobile US

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French telecom giant Free bids for T-Mobile US
France's Iliad, which operates Free, has bid for a contolling stake in US carrier T-Mobile. Photo: Eric Piermont/AFP
08:52 CEST+02:00
French upstart telecom operator Iliad, which operates Free, said on Thursday it has bid for a controlling stake in US carrier T-Mobile, offering an alternative to a potential tie-up with rival Sprint.

French upstart telecom operator Iliad said on Thursday it has bid for a controlling stake in US carrier T-Mobile, offering an alternative to a potential tie-up with rival Sprint.

Iliad said in a statement it proposed $15 billion for 56.6 percent of T-Mobile, which is controlled by Germany's Deutsche Telekom and is the fourth largest US wireless group.

The offer was described as 42 percent above what T-Mobile's price had been before reports of a potential Sprint tie-up began circulating.

Iliad, still majority owned by French Internet pioneer and the firm's founder and former CEO Xavier Niel, carved out a major slice of the French home telecoms market through innovative offers and aggressive pricing. It was awarded a mobile phone licence in 2009.

The French firm said a deal with T-Mobile was a good fit because both firms have been "disruptive" by offering lower prices and new services to challenge major rivals.

"The US mobile market is large and attractive," said the statement by Iliad, which operates the growing Free service in France, providing a "triple-play" phone, Internet and cable television deal.

"T-Mobile US has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France."

The statement said that a tie-up with the French group "should not raise any antitrust issue in light of the competition rules given that Iliad is not present in the United States."

A deal for Sprint and T-Mobile to merge has been brewing for months, with one report saying terms valuing T-Mobile at more than $30 billion were being hammered out.

Sprint, the number three US carrier which is controlled by Japan's SoftBank, has made it known that it wants T-Mobile to challenge the top two operators, Verizon and T-Mobile.

T-Mobile had not previously indicated any interest in being bought, although some reports indicate that Deutsche Telekom, which owns a controlling stake, would like to cash out.

Iliad said it would finance the deal "via a combination of debt and equity" and that it "has the support of leading international banks for the acquisition debt."

T-Mobile US shares were up more than 6.5 percent to close at $32.94 on the news.

T-Mobile issued a statement said it had received an offer from Iliad, indicating it would not comment further.

Credit Suisse analyst Joseph Mastrogiovanni said in a note to clients that the Iliad bid "seems a bit of a stretch" and that Sprint would likely pay a higher price but that "it could put pressure on Sprint to move sooner rather later."

"Ultimately, we believe T-Mobile would find a combination with Sprint more attractive," the analyst said.

   

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