Amid Sprint and T-Mobile acquisition talks, a new third party has disrupted the potentially smooth transition with a $15 billion offer.
A possible Sprint and T-Mobile merger is no secret as talks of acquisition have been going on for a long time. Some regulatory hurdles held back the $32 billion deal, which will unite the third and fourth largest wireless carriers in the US and reduce the competition in the industry. But according to news report a third party offer has disrupted the transition. France's fourth largest mobile company, Iliad, has offered $15 billion for a majority share in T-Mobile USA.
Iliad, which was founded by Xavier Niel, a billionaire French entrepreneur who owns the newspaper Le Monde, made a full cash offer. Sprint's parent company SoftBank Corp was the sole runner in the race until the new French upstart jumped in with a new offer. T-Mobile USA is almost 60 percent bigger than Iliad in terms of market value, but that hasn't stopped the French firm from offering the deal.
"The U.S. mobile market is large and attractive," Iliad told The Wall Street Journal in a statement confirming the possible interest in T-Mobile bid, Thursday. "T-Mobile US has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France." The mobile company, native to France, has a similar disruptive style like T-Mobile when it comes to attracting new customers and a merger will give it a better chance of exploring the world's largest telecom market.
In fact, Iliad believes its offer to acquire T-Mobile USA will face less regulatory obligations compared to Sprint-T-Mobile merger, mainly due to its least impact on the carrier competition in the country. If Sprint merges with T-Mobile, it will not only reduce the number of carriers but also create a stronger third rank competition to AT&T and Verizon.
"I suspect this (Iliad) deal would get through Washington much easier than the Sprint deal. I don't see any real red flags that would complicate it," Paul Gallant, an analyst at Guggenheim Securities in Washington, told Chicago Tribune. "There don't appear to be any competition issues the way there would be with a Sprint deal. That's the biggest different and that's significant."
Iliad's $15 billion cash offer values the remaining stake in T-Mobile US at $40.50 per share. Iliad in France competes with bigger players such as Orange, SFR and Bouygues. It serves more than 14.3 million customers, which includes 8.6 million mobile subscribers, according to its first quarter report this year. In comparison,T-Mobile has more than 50 million cell phone customers.
