French upstart telecommunications company Iliad, which is known as “Free Mobile” in France, has made an offer for T-Mobile US, reports the Wall Street Journal. The bid would counter one by Sprint for the fourth-largest wireless carrier in the U.S.
Iliad, in a news release, said it offered $15 billion in cash for 56.6% of T-Mobile US at $33 a share. Iliad added that the remaining 43.4% of T-Mobile US would be worth $40.50 a share, based on expected cost savings, giving the deal an overall per-share value of $36.20, or 17% higher than T-Mobile’s closing price Wednesday.
T-Mobile’s response was not immediately available.
In many ways Iliad founder Xavier Niel is similar to Masayoshi Son, the head of Softbank and now his rival suitor for T-Mobile US, notes Reuters. Both have operated their companies as challengers who cut prices and take on larger rivals with bigger resources.
The difference between a T-Mobile/Sprint merger and a Iliad/T-Mobile merger is that Iliad would leave four major carriers in the United States.
Iliad has sparked a fierce price war in France’s mobile-telephone market via its cutthroat rates, and sees the offer as a “one-time opportunity to enter the world’s-largest telecoms market,” quotes the WSJ.
The French public is the beneficiary of this competition, notes Engadget. Rates are now lower across the board, with Orange, SFR and Bouygues all launching discount brands.
More than 8 million consumers flocked to Free Mobile as Orange and France’s two other wireless operators, Vivendi’s SFR and Bouygues suffered steep declines in sales. In April, Vivendi vacated the market altogether by selling SFR to Luxembourg-based Altice in a deal valued at 17 billion euros, reports Bloomberg.
Free offers 20 GB/mo 4G service along with unlimited voice and messaging for $US27/month. The Freebox Revolution router, which delivers a triple play of broadband, TV and landline telephone calls to Iliad’s 6 million subscribers, is a big reason Iliad’s stock returned 151 percent in the three years ended on June 24.
France owns 28.4 percent of Orange, previously France Telecom, which is Europe’s fourth-biggest telecom operator. Some in the government were concerned that Iliad did NOT charge higher prices. Orange has decided not to pursue a merger within the marketplace despite encouragement from the French government.
Orange and Bouygues Telecom, France’s third-largest mobile provider, had discussed partnership to buy SFR, but now Altice will merge SFR, France’s second-largest mobile provider, with its French cable unit Numericable.