France’s Free drops bid for US giant T-Mobile

French telecom giant Iliad, the parent company of Free, has announced it is dropping its bid to buy a controlling stake in US wireless carrier T-Mobile after being told its offer was too low.

France's Free drops bid for US giant T-Mobile
France's Free has dropped its bid to take control of US telecoms giant T-Mobile. Photo: AFP

French telecom operator Iliad announced Monday it was dropping its bid to buy control of T-Mobile after discussion with the US wireless carrier's majority owner Deutsche Telekom, which viewed the $15 billion (€12 billion ) offer as too low.

Iliad had made its surprise bid in late July in an effort to gain 56.6 percent of T-Mobile, the fourth-ranked cellphone operator in the United States.

The Wall Street Journal reported in August that T-Mobile refused to discuss the takeover possibility with Iliad, or even allow access to its financial information.

Sprint, the third-ranked US wireless company, abandoned a rival bid for T-Mobile in August after concluding that a tie-up would run afoul of market regulators.

In 2011, US regulators blocked AT&T's effort to buy T-Mobile, saying it would be harmful to consumers and competition.

Iliad is owned by a billionaire, Xavier Niel, and is the parent company of Free, a French telecom unit offering phone services, Internet access and television.

T-Mobile's share price fell nearly four percent in early afternoon trading in New York after Iliad's statement, before recovering slightly to $27. Iliad's share price slid 1.8 percent on Thursday to close at €156.15 in Paris.

Deutsche Telekom has been looking to sell off T-Mobile for years, but its management is divided on the strategic interest of shedding what is one of the group's main growth centres.

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‘Forget Silicon Valley, it’s better in France’

As work began on the "world's largest" tech incubator in Paris, French billionaire and telecom mogul Xavier Niel says despite the moribund French economy and the reputation of its bureaucracy, it's actually easier to start a business in France than Silicon Valley.

'Forget Silicon Valley, it's better in France'
Is is easier to start a business in France than Silicon Valley? Photo: Luke Ma/Flickr, AFP

On the occasion of the laying the ceremonial first brick of what he claims will be the world’s largest start-up incubator, Niel has been telling reporters why France is so great.

“It’s much easier to start a company in France than Silicon Valley where everybody copies you,” Niel, 47, told Europe 1 radio on Thursday. “In France there is support for starting a company. The grass is not greener on the other side.”

Niel knows what he's talking about. He founded Free, which is France's second largest internet provider and third biggest mobile phone service.

His €230 million incubator at Gare d’Austerlitz is to open in 2016 and will provide a range of services, advice and access to funding for entrepreneurs who have a great tech business idea, but little else.

The 33,000-square-metre space is to be home to 3,000 workers.

Niel agrees France has its problems, but notes that it has strengths that exist nowhere else.

“Of course the French system isn’t perfect, there’s only one company on the CAC 40 (France’s benchmark stock market) that is less than 30 years old when they make up 50 percent of the market in other countries,” Niel said.

But he also noted France’s reputation for high taxes isn’t deserved.

“It’s true, though it must sound bizarre, but I pay less in capital gains tax in France than my successful friends pay in the United States,” he said. “On top of that the best engineers are from here.”

He added: “When I travel, I always see French people working in high tech businesses. We train them well, they are great, they are famous throughout the world.”

And he's not afraid to go where the money is. The first business he founded was at age 19 sold sex-related chat services on France's now defunct internet precursor Minitel.

As France tries to convince the world that it’s open for business, and not dominated by stagnant Socialism and record unemployment, the incubator is getting a lot of support from the country’s ruling class.

Historically unpopular president François Hollande laid the ceremonial first brick on Wednesday the crowd of some 200 people in attendance included many of his government’s ministers.

Along with the appointment of an ex-banker to fix the economy and public relations visits to the UK and Germany, France has launched a charm offensive aimed at giving it a business-friendly image.

Niel says the truth about France has been obscured by nasty propensity to bash it in the press.

“The idea is that France is a fantastic place to start a company. People don’t realize it because we life in a world marred by ‘bashing’,” he told Europe 1. “But in France we have all the services needed to found a company.”