Iliad confirms bid for T-Mobile; AT&T/Verizon sell off

France's Iliad (OTC:ILIAF) is offering $15B in cash for a 56.6% stake in T-Mobile USA (TMUS +7.3%) at a price of $33/share. Iliad values the remaining 43.4% at $40.50/share. Sprint (S -5.3%) has been reported to be planning a ~$40/share deal.

Iliad says it has obtained financing from unnamed banks, and would also do a capital raise to help pay for the deal. One issue: Iliad has a current market cap of just $16B, less than T-Mobile's $24.8B and Sprint's $30.6B. Sprint has reportedly lined up a $40B+ debt package to finance a T-Mobile deal.

A source tells the WSJ Iliad, which has upended the French mobile market with its aggressive pricing, views a T-Mobile merger as a "one-time opportunity to enter the world's-largest telecoms market."

Iliad also thinks (perhaps with good reason, given FCC/DOJ remarks) regulators will be more comfortable with its bid than Sprint's, since Iliad has no U.S. presence.

AT&T (T -2%) and Verizon (VZ -2.3%) have joined Sprint in selling off, as investors mull the possibility of a deal that would leave the number of nationwide U.S. carriers at 4. Concerns about Iliad's pricing history might also be weighing on shares.


Earlier: Iliad reportedly bids for T-Mobile USA

Comments (13)
  • DougRk
    , contributor
    Comments (1901) | Send Message
    Wow. Out of left field!
    31 Jul 2014, 01:06 PM Reply Like
  • BigAppleGuy
    , contributor
    Comments (204) | Send Message
    There is no way Iliad pulls this off...huge buying opportunity here.
    31 Jul 2014, 01:13 PM Reply Like
  • DougRk
    , contributor
    Comments (1901) | Send Message
    Don't discount the significant anti-trust issues Sprint faces. That could easily allow this bid to win. The philosophy of these two companies is compatible as well.


    Legere in the Sprint fold would not work. He may lobby the board hard to link with Niel.


    Never mind that DOJ rumblings and the market are indicating that the Sprint buyout isn't likely.
    31 Jul 2014, 01:37 PM Reply Like
  • aryanmehr
    , contributor
    Comments (144) | Send Message
    Did you forget the hyperbole touting the benefits of a T & TMUS merger? Even a four year old could have predicted that this would have failed to consummate. Nevertheless the HHI index results were all over the wall manifesting violations of the essence of the Anti Trust laws.


    A Sprint/TMUS merger have no inklings that manifest Anti Trust issues or possible harm to the public. The combine will still be smaller than T and VZ respectively.


    The recent offer by France's one time porn king, Xevier Niel, is a far inferior offer than what Sprint is offering and I don't give it even a 1% possibility of it being seriously entertained by the Deutsche Telekom.


    The only issue pending now is whether Sprint can overcome the FCC hurdle requiring 4 independent National Telecoms. IMHO the FCC's requirement of 4 carriers in lieu of 3 is asinine when you consider the current status of the US market. All this merger would do is accelerate competition and create a level playing field, still keeping the Combine in third place.


    The synergies of the combine would save it at least $3B annually and accelerate the build-out of their 4G LTE networks.
    31 Jul 2014, 05:01 PM Reply Like
  • DougRk
    , contributor
    Comments (1901) | Send Message
    @ary, it comes down to the aggressiveness of the DOJ. They combined would be right at 100M subs, just a hair behind VZ. With the CLWR takeover, Sprint's spectrum reserve is just huge, and the combined would arguably be the top carrier in the US going forward. I can't see a merger that creates a new top player.


    We have the market telling us the last few months that it doesn't believe a Sprint merger is likely. The market is usually right about these things. The purported $40 takeout has seen the market yawn and the share price remain around $30.


    For DT, it's easy money now vs. maybe money later. Iliad's bid looks legit to me. I don't know why so many are quick to dismiss it.
    31 Jul 2014, 05:22 PM Reply Like
  • thesahibzada
    , contributor
    Comments (747) | Send Message
    so this means a bidding war will start for Tmobile lol
    31 Jul 2014, 01:17 PM Reply Like
  • Topcat
    , contributor
    Comments (580) | Send Message
    I hope no buy or merger with Sprint. As it is, there is not enough competition. T-mobile offers the best mobile deals currently, and is pushing the other carriers. I'll be going to New Zealand later this year, and T-mobile gives me free data (text msg, email. web browsing, music streaming). Who else does that!! And, can make free phone calls when on WiFi (or I can tether my tablet from my mobile phone and do free Skype video back to the USA).
    31 Jul 2014, 01:55 PM Reply Like
  • DougRk
    , contributor
    Comments (1901) | Send Message
    Agreed top. Have been with T-Mo a long time, and they're especially energized now under Legere. Would be a terribly sad day to see their can-do spirit sucked away under the clumsy elephant's foot of the can't-shoot-straight bunch at Sprint.
    31 Jul 2014, 02:22 PM Reply Like
    , contributor
    Comments (6425) | Send Message
    Sprint is about Alibaba, M Son is not stupid. He invested too much in Sprint to let it lose.


    31 Jul 2014, 02:50 PM Reply Like
  • Energysystems
    , contributor
    Comments (2112) | Send Message
    Everything Alibaba can offer to Sprint, is already available for anyone who owns a smart phone. E-commerce, cloud, payment services, web portals...all are already in use. The only thing Softbank brings to the table is the $$ and leadership of Son.


    Which is great, unless you don't use those things to Sprint's advantage. For instance, Hesse is still running Sprint. Why on earth is his still employed there? Sprint is losing subs; every other major telecom is growing. Hell, Son was talking about "starting a price war" months ago, and in the latest quarterly report, is now "pondering price cuts". Step on the gas, or get passed, and Sprint has been lapped.


    I've never thought the $S/$TMUS possibilities would ever bear fruit. The DOJ doesn't want it, and by the price action, the street doesn't believe it will happen. While I doubt Iliad will be the winning bidder, I'm sure there are quite a few large telecoms out there looking at $TMUS. Legere has done an incredible job. I just hope, no matter who ends up buying $TMUS, that Legere keeps his job.
    31 Jul 2014, 03:10 PM Reply Like
  • DougRk
    , contributor
    Comments (1901) | Send Message
    @energy, total, 100% agreement with your reply. The only wildcard I think is Legere personally lobbying the board to link with Niel. Seems like those two are a match made in heaven. Inlcuding Niel's "peep show" history and Legere's public cursing. Wouldn't be surprised to hear 5 years from now that Legere encouraged this bid behind the scenes.


    Legere is arguably at his peak influence now. Subs way up, earnings rebounding. Public acclaim for service and prices and spirit. The board would listen to him. Linking with staid Sprint and subverting to Son seems like such a radical turn away from the success Legere has brought. Ugh.
    31 Jul 2014, 03:34 PM Reply Like
  • aryanmehr
    , contributor
    Comments (144) | Send Message
    First, it is apparent that Legere will keep his job at the new Combine. It is doubtful whether Iliad's owner, Xavier Neil, would have a chance to purchase TMUS if the Sprint/TMUS merger is declined by the FCC. However if a bidding war were to proceed, his $9.5 billion is in no way a match for Masayoshi Son's $20 billion, which does not include Masa's 35% stake in Alibaba Group Holdings, Inc. estimated at ($87 billion predicated on a market cap of $250 billion).


    His offer does not seem worthy of entertaining, especially knowing that he would lose nothing if he was unable to consummate the deal, while Sprint would be liable for $2 billion. I wonder if he is willing to Anti up his offer and pay a penalty if he didn't go through with the deal.


    Charlie Ergen's potential offer would be a much better fit for TMUS, however he knows not to interfere with Masa's dealings lest he pay the financial consequences.


    Nonetheless, at face value Sprint's offer is still far superior to that proposed by the French company, Iliad. Iliad's proposed synergies are all hypothetical and likely to fail.
    31 Jul 2014, 05:57 PM Reply Like
  • aryanmehr
    , contributor
    Comments (144) | Send Message
    What he brings to the table are the most important elements for a successful company:


    Capital, and access to inexpensive financing.
    Leadership, Experience and Knowledge.
    His US and Asian coterie are second to none.
    His success in Telecom with Softbank.


    If you want real competition pray for a S/TMUS merger because no other duo can take on the current duopoly of T & VZ.


    I just don't see the logical synergies engendered with an alternative to the current pending merger with Sprint.
    31 Jul 2014, 06:35 PM Reply Like
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