T-Mobile gets another bidder: France's Iliad
The French telecommunications company is making a play for T-Mobile, according to The Wall Street Journal.
T-Mobile has a suitor, and it's not Sprint.
French telecommunications provider Iliad has made an offer for a controlling stake in T-Mobile. The news was earlier reported by The Wall Street Journal. The move follows reports that Sprint and its parent, Japanese carrier SoftBank, were close to a deal to buy T-Mobile.
T-Mobile is a hot property thanks to its flamboyant Uncarrier campaign and the resulting turnaround in customer growth. The company posted second-quarter results earlier Thursday that included a new gain of 1.5 million customers and more than 900,000 branded postpaid subscribers. A second interested party may suggest a potential bidding war.
T-Mobile shares rose 5 percent to $32.45 on the news, valuing its market capitalization at just over $26 billion.
Iliad made an offer to T-Mobile's board less than a week ago, according to the WSJ. It's believed that Sprint has made an offer for $30 billion, the report said.
Iliad later issued a press release confirming its interest in T-Mobile, as well as its offer of $15 billion in cash for 56.6 percent of the company, representing $33 a share. It values the remaining 43.4 percent of T-Mobile US at $40.50 a share on the basis of $10 billion of merger cost benefits. It argues that by that measure, the overall value of the shares is $36.20.
T-Mobile confirmed that it received the proposal but declined to comment further.
Iliad said it would finance the deal through a combination of debt and equity, and that it has the support of "leading international banks" for the debt.
While T-Mobile is a publicly traded company, it is still majority owned by Deutsche Telekom, which has been eager to offload the asset to focus on its core business in Europe.
There have been a number of reports about SoftBank's efforts to buy T-Mobile and merge it with Sprint, although regulators have expressed their reservations about the deal. It's believed that a Sprint-T-Mobile deal has cooled as the two sides think through getting the regulatory hurdles.
T-Mobile CEO John Legere, not afraid to shoot his mouth off, was mum on today's earnings conference call when it came to a potential deal. He did acknowledge that T-Mobile would ultimately benefit from more scale, which could accelerate its ability to compete against AT&T and Verizon Wireless, which are two far larger companies.
A deal with Iliad would likely be easier to get through regulators because it doesn't involve the combination of two competitors, which has been a key hold-up with the government. Iliad is a French telecom company with its own history of implementing cut-throat rates, and sees it as an opportunity to enter the US market, according to the WSJ report.
But there was plenty of skepticism that the Iliad deal would derail a potential merger with Sprint, as concerns about the company's ability to obtain financing and SoftBank's deeper pockets would almost certainly win out.
"Iliad bid seems a bit of a stretch," said Credit Suisse analyst Joseph Mastrogiovani. He added that it could hasten Sprint and SoftBank's efforts.
Shares of Sprint fell more than 6 percent to $7.27 on the news. Sprint posted its own quarterly results on Wednesday, showing yet another quarter of subscriber losses. Some investors and Sprint's owner, SoftBank, hoped a combination with T-Mobile would speed up its own turnaround efforts.
Sprint declined to comment.
Updated at 10:12 a.m. and 12:17 p.m. PT: To include a statement from Iliad confirming the deal and an analyst comment.