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

Thu Jul 31, 2014 9:58pm EDT
 
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By Soyoung Kim and Leila Abboud

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

The approach will further shake up a U.S. media and telecoms market already in tumult as a series of U.S. cable and cellular operators have bid for rivals to cut costs amid slowing growth. The market and its relatively healthy margins remain alluring to some foreign operators like Softbank and Iliad, however.

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 to the pre-announcement share price, once expected cost savings of $10 billion were taken into account.

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, 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. A spokesman for Softbank in Tokyo also declined to comment.

Despite Iliad's lower offer, three people 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.   Continued...

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