French telecom Iliad making a surprise $15B bid for control of T-Mobile US

French telecom Iliad wants to drink Sprint's T-Mobile milkshake

Update: Iliad has confirmed with a press release that it is indeed making the bid for T-Mobile, and has submitted the offer to T-Mo's Board of Directors. Iliad's owners and Board of Directors have unanimously approved the deal, which would see Iliad paying $15 billion in cash for 56.6 percent of T-Mobile, valuing it at $36.20 per share, a 42 percent premium over its current stock price.

In a bid that's come way out of left field, French telecommunications firm Iliad SA is also offering to buy a controlling stake in T-Mobile US. T-Mobile, itself a subsidiary of T-Mobile Germany, has been engaged in long-running negotiations with US rival Sprint. The $15 billion bid from Iliad comes as a surprise, not just for their previously unexpressed interest, but that Iliad is a smaller company that T-Mobile in both terms of subscribers and value.

Iliad's carrier subsidiary Free Mobile has a little over 7 million subscribers, while T-Mobile just crossed 50 million. Iliad as a company is valued at $16 billion (€12 billion), while T-Mobile US has a market capitalization of $24.8 billion. Iliad has apparently offered T-Mobile "about $33 a share" for the company... less than a 6% premium on the trading price of TMUS before the revelation of the proposal. Regardless of how much Iliad offers for a takeover of T-Mobile, but they'd be looking at taking on an enormous debt load.

Iliad's Free Mobile has only been around since 2012, and has captured more than 12% of the French cellular subscriber market. They've been incredibly aggressive with their pricing, offering plans for a little as €2 ($2.68) a month.

But there's a bit of a kindred spirit between T-Mobile US and Free Mobile. Both have pushed to simplify the mobile phone process in eliminating (or avoiding from the start) subsidies on phones and dumping formal contract plans.

Source: The Wall Street Journal, Bloomberg, Iliad

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Derek Kessler

Managing Editor of Mobile Nations, Army musician, armchair pundit, and professional ranter.

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French telecom Iliad making a surprise $15B bid for control of T-Mobile US

2 Comments

I'm pumped. Iliad (known as Free in France) pioneered the "unCarrier" initiative by majorly undercutting its competition as a DSL provider first. They came out with the Free Box years back which pioneered the triple package (TV, home phone, Internet) model with insanely low pricing. And like this article says they attacked the mobile phone market with the same strategy (undercutting all competitors who then had to adjust their pricing structures WAY DOWN). Let me tell you, if Free comes to the US this will be a major win for the consumers. They will make Verizon and AT&T vomit to the delight of its customers.

I wish what you said was true but how can you make the existing t mobile plans cheaper if they barely make any profit now ($20 million in losses last quarter and now $400 million profit). My family is a free customer in France, so it'll be interesting to see what happens. Especially since I'm going to dump Verizon for t mobile this fall. It will be awesome to have internet when I visit my family.

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