French Firm Makes Bid for T-Mobile

July 31, 2014

By J. Sharpe Smith–

July 31, 2014 — Sprint is no longer the only suitor for T-Mobile. A French wireless firm, Iliad, made a $15 billion in cash for 56.6 percent of the carrier, which works out to $33 per share.

Iliad values the remaining 43.4 percent of T-Mobile at $40.5 per share on the basis of $10 billion of synergies to the benefit of the T-Mobil shareholders, which works out to an overall value of $36.2 per share, a premium of 42 percent compared with T-Mobile’s share price of $25.41.

“The U.S. mobile market is large and attractive. T-Mobile has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France,” according to an Iliad press release.

The cash portion would be financed via a combination of debt and equity. Iliad has the support of leading international banks for the acquisition debt, according to Iliad. The equity portion would be approximately €2 billion, and Xavier Niel, founder and majority shareholder of Iliad, would participate in the capital increase.

Iliad was founded in 1999 as a provider of low-cost wireless and today offers 2G, 3G and 4G broadband wireless service. The carrier had 3G coverage of 60 percent of the French population at the end of 2013. It launched 4G service in December 2013 and had 1,115 sites online as of March 2014. It has plans to deploy up to 10,000 more towers to cover 90 percent of the population. Iliad made an informal bid to purchase Bouygues Telecom last spring, which is reportedly faltering.

Whither Sprint?

Iliad’s offer comes during a critical period as Sprint continues to pursue its $32 billion offer for T-Mobile. The deal is far from a sure thing, needing approval from regulators and government antitrust lawyers. But it looks more possible that and a T-Mo/Iliad hookup. Analysts question whether Iliad could raise the cash for the purchase and whether T-Mobile owner Deutsche Bank is even interest in the sale.