Sprint’s bid for wireless competitor T-Mobile US just got very complicated. According to Reuters, French telecom company Iliad has made a surprising buyout offer for the fourth largest U.S. cell phone carrier, setting the stage for a “potential bidding war” with Sprint, which is owned by Japan’s Softbank Corp.
In a statement, Iliad announced that it has offered to acquire a majority stake in T-Mobile at $33 per share for $15 billion. The company says the offer “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 [are] taken into account,” according to Reuters.
As noted by the newswire, the offer is less than the approximately $40 per share Sprint has agreed to pay Deutsche Telekom, the majority owner of T-Mobile. Despite Iliad’s lower bid, sources at the company told Reuters that founder Xavier Niel is confident his bid will be accepted. That’s because an Iliad-T-Mobile combination won’t be subject to the same anti-trust probes that Sprint will invariably have to face to complete its deal.
Well-informed experts don’t dispute that contention. Reed Hundt, former chairman of the U.S. Federal Communications Commission, told Reuters: “Softbank has been told in many very clear coded words that the Department of Justice and the FCC would probably not approve the acquisition. There’s no question to me that the FCC would say ‘bienvenue’ to the proposed Iliad deal.”
However, Niel’s bravado could be misplaced. Even though he currently owns part of Israel-based mobile operator Golan Telecom, experts told Reuters that Niel’s “bid to enter the U.S. mobile market is a long shot.”
The problem is that Iliad, a broadband specialist, lacks experience in mobile, which is the core of T-Mobile’s business. Not only that, the French company is not well versed in competing in the U.S. telecom market, a landscape rendered especially cutthroat with the formidable presence of rivals AT&T and Verizon, both of whom lead the market.
Photo: Flickr user Rodrigo SEPÚLVEDA SCHULZ, CC BY-SA 2.0