France's Iliad challenges Sprint for control of T-Mobile

Thu Jul 31, 2014 7:02pm EDT
 
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By Soyoung Kim and Leila Abboud

PARIS/NEW YORK (Reuters) - French telecommunications company Iliad SA (ILD.PA: Quote) has made a surprise offer for T-Mobile US Inc TMUS.N, setting up a potential bidding war with Sprint Corp (S.N: Quote), the U.S. mobile carrier now controlled by Japan's Softbank Corp (9984.T: Quote).

Iliad, which has shaken up the French mobile and broadband market in the past decade with its cheap, pared-down subscriber plans, bid $15 billion in cash for 56.6 percent of T-Mobile US at $33 per share, it said in a statement on Thursday.

The Paris-based company said its offer for the fourth-largest U.S. carrier values all of T-Mobile at $36.20 per share, a premium of 42 percent over the pre-announcement share price.

That is less than the roughly $40 per share Sprint agreed to pay under the broad terms of an agreement worked out with Deutsche Telekom AG (DTEGn.DE: Quote), T-Mobile's majority owner. The terms of that proposal, which followed months of talks and which was reported by Reuters in early June, would value T-Mobile at nearly $32 billion.

Deutsche Telekom and Sprint declined to comment, and a representative for Softbank could not be reached.

Despite Iliad's lower offer, a person close to the French company said founder Xavier Niel believes he has a strong card to play because his bid would not face the antitrust scrutiny that confronts Sprint in trying to merge the third and fourth-biggest U.S. mobile operators.

“SoftBank has been told in many very clear coded words that the Department of Justice and the FCC would probably not approve the acquisition," said Reed Hundt, a former chairman of the U.S. Federal Communications Commission. "There’s no question to me that the FCC would say 'bienvenue'” to the proposed Iliad deal.

The FCC and Department of Justice expressed a desire earlier this year to have at least two more network operators competing against AT&T and Verizon.   Continued...

 
A T-Mobile store sign is seen in Broomfield, Colorado February 25, 2014.   REUTERS/Rick Wilking