Iliad SA, led by billionaire founder Xavier Niel, said July 31 it offered $15 billion... Read More
Iliad’s discussions with potential partners may accelerate after Deutsche Telekom indicated it’s willing to negotiate a sale if a bid puts a valuation of at least $35 a share on the business, said the people, who asked not to be identified because the talks are private. The German company hasn’t received a new proposal and there’s no guarantee a higher offer will be made, they said.
The French carrier, which is
scheduled to hold a press conference today after reporting first-half earnings on Aug. 29, has been talking to U.S. buyout firms as well as companies and sovereign-wealth funds, the people said.
Iliad’s previous offer of $33 per share in cash, or $15 billion, for a 56.6 percent stake in T-Mobile, was rejected as too low a month ago. At a strategy meeting on Aug. 28, Deutsche Telekom senior managers discussed $35 to $40 as a realistic per-share valuation range at which the carrier is willing to negotiate a sale, said a person familiar with the matter.
Improved Offer?
Deutsche Telekom’s valuation of T-Mobile opens the door for an improved bid from Iliad or new proposals from potential suitors such as Dish Network Corp. after Sprint (S) Corp. last month withdrew from talks to buy the unit. Iliad is aiming to replicate in the U.S. its French tactics of gaining market share with rock-bottom prices. Niel is confident T-Mobile could increase profit even while aggressively cutting prices and costs, a person familiar with the matter has said.
Iliad’s last proposal projected $10 billion in potential savings and gave an overall value for T-Mobile of $36.20 a share by including such synergies. T-Mobile shares last closed at $30.08 a share in New York, valuing the company at $24.3 billion as of Aug. 29.
The French company’s shares slid 2.9 percent to 162.30 euros at 9:12 a.m. in Paris, for a market value of $12.3 billion. Deutsche Telekom added 0.2 percent to 11.40 euros in Frankfurt.
Sprint, which was said to have discussed an offer of about $40 per T-Mobile share with Deutsche Telekom, walked away from talks because of concerns regulators may block a transaction that would reduce the number of nationwide U.S. wireless providers to three from four. A successful bid by Iliad would leave the U.S. market structure intact.
AT&T Fallout
Deutsche Telekom, which owns about 67 percent of Bellevue, Washington-based T-Mobile, would consider forgoing a higher price if that meant avoiding the uncertainty of a prolonged regulatory review, other people familiar with the matter said last month.An Iliad representative declined to comment.
The German phone company wants to avoid reliving its failed attempt to sell T-Mobile to AT&T Inc. for $39 billion. After that accord in 2011 was opposed by the U.S. Federal Communications Commission and the Department of Justice, T-Mobile proceeded to merge with MetroPCS Communications Inc.
Iliad’s bid is the boldest move yet by founder Niel, a 47-year-old entrepreneur who got his start with a sex-chat service on Minitel -- France’s now-defunct precursor to the Internet -- and is now France’s 8th richest person according to the Bloomberg Billionaires Index.
In the telecommunications industry, Niel’s move to fame came from pioneering so-called triple-play packages combining TV, broadband, and landline services.
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