T-Mobile, the fourth-largest carrier in the U.S., may find a buyer yet.
After nearly a year of ill-fated negotiations with Sprint, it seemed a deal was off of the table for the foreseeable future. But now, Iliad, the little-known French telecom company that made an out-of-the-blue bid for the company this summer, is back and ready to sweeten the pot.
Deutsche Telekom, which owns 67 percent of the Bellevue-based U.S. carrier, said as recently as last week that it was interested in entertaining offers that value T-Mobile at $35 per share or more — that’s slightly above the $15 billion acquisition offer ($33 per share) the French carrier previously made.
Yesterday, Illiad said during its second-quarter earnings call that it is now considering improving its offer, and is in talks with private equity firms to raise more capital, Reuters reports. Illiad’s CFO Thomas Reynaud said its previous offer is still pertinent, but it could “evolve” in terms of the percent of capital that Iliad proposed to buy.
In particular, it’s been in talks with U.S. buyout firms as well as companies with sovereign-wealth funds, but Deutsche Telekom has yet to receive a new offer, according to Bloomberg.
One reason that a sale is still in the realm of possibilities is because T-Mobile’s German owners appear particularly motivated to sell.
The $35 a share price that it is currently seeking is lower than the $40 a share offer that Sprint was reportedly prepared to make, so Deutsche Telekom does appear eager to negotiate. Talks with Sprint fell apart due to regulatory concerns, but presumably a deal with a foreign investor would pass muster, as regulators seek to keep the number of national carriers at four.
Since the negotiations between Sprint fell apart, T-Mobile has been hell bent on taking over as the third-largest carrier in the U.S.
“I’m going on record—I predict we’ll overtake Sprint in total customers by the end of this year,” said T-Mobile’s CEO John Legere. “Not someday. Not next year. This year. Americans are voting with their feet, and they’re joining this Un-carrier revolution by the millions.”
It’s not a huge stretch with the two carriers within four million or less subscribers of each other, but to remain competitive, Sprint and T-Mobile have been launching new deals for consumers weekly, one each outdoing the other by offering a little more data for a little less. There’s questions how Sprint and T-Mobile will be able to continue to afford the price war if the subscribers don’t follow.
So far, T-Mobile has seen early success. In its most recent earnings, it achieved its fifth consecutive quarter of subscriber growth, and turned a profit of $391 million.
A sale to Iliad may be a good fit since the little known carrier is in somewhat similar circumstances in Europe. The company, which was founded by billionaire Xavier Niel, provides cellular service under the “Free” brand, and is now France’s fourth-largest provider, just like T-Mobile in the U.S.
Today, T-Mobile’s shares are currently trading flat at $30.30 a share.
