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

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.

Original story: 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. Iliad is seeking a 56.6% share that would give them de facto control of T-Mobile. 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

Derek Kessler

Derek Kessler is Special Projects Manager for Mobile Nations. He's been writing about tech since 2009, has far more phones than is considered humane, still carries a torch for Palm (the old one), and got a Tesla because it was the biggest gadget he could find. You can follow him on Twitter at @derekakessler.

  • Bold move indeed. I doubt their pockets are as deep as Softbank's though.
  • Barely half the amount, but I think it's because some believe the oversight committee won't approve because of Sprint.
  • Anyone's better than Sprint! Maybe... Though I'd feel bad for them if someone else gets the winning bid.
  • Of all the companies wanting to merge with T-Mobile, Sprint would be the best to offer a better network. Posted via Android Central App
  • You've seen what they've done with their own network, right? It speaks for itself.
  • I have, tremendous improvement all around me over the last year and a half. Sprint rocks where I'm at, 9GB used on LTE last month, 1GB on 3G... Not sure why people act like they're regressing or purposely ignoring their network. I'm sure it's still downright awful in places tho, but that doesn't mean it's staying like that.
  • 1 GB on 3g is junk Posted via Android Central App
  • Better than 1mb on edge Posted via Android Central App
  • How can having used 1GB on 3G be junk? I wasn't talking speed but total data transferred... Basically I was on LTE for 90% of my data use (not necessarily time given the other variables involved).
  • Because people go with impressions not reality sometimes. Sprint sucked before therefor they will always suck Posted via Android Central App
  • Yes I have. And its a major improvement from what it was. Try looking at the big picture instead of remembering the past.
  • Now only if that was the case in the majority of their coverage areas. Where you live, it sounds like the complete opposite of how they are where I am.
  • Sprint is getting better and better in the southern MA, and RI area. I've seen nothing but improvements over the past year. Posted via Android Central App
  • So there can be 4
  • No there cannot be
  • party pooper
  • im here for the pants party
  • Well apparently it can "Nothing I shoot ever gets back up again."
  • Apparently not if you will goggle DT s answer Posted via Android Central App
  • NoNexus just committed seppuku.
  • lmao, +1
  • Nope, they do not and cannot get the money for this purchase. All this would be is a rehash of the DIsh/Clearwire/Sprint thing. BREAKING NEWS: NoNexus to buy Google It is just as likely to happen as this deal.
  • If it does go through though, you better have some deep pockets ;) Posted via HTC One on Sprint
  • Meh, It is in the couch cushions :-)
  • I would pay money to watch you seppuku. You're too big of a coward to do it though.
  • Yes you are so right Mr. Internet Tough Guy. Tell you what. You go first and show me how it is done. **cue the "Real men of Genius" theme music ***
  • Well, we know you have no honor. You said you'd change your name if the Nexus 5 had a 32GB option. You didn't. Your opinion is worthless.
  • No, there were 3 conditions. I know that it is tough for you to remember stuff so let me refresh your memory. 32GB, 16 minimum (they did that) The battery life had to be good and larger ( I believe I had it in the 2700-300 range) which it FAILED finally the camera had to be good, WHICH IT FAILED So I held up my end. Two of the 3 things that had to happen the Nexus 5 failed on at launch. The camera has gotten slightly better, but the battery has gotten worse. Thus I did not have to change my name.
  • I hope I'm not the only one who had to Google "Seppuku." lol Its actually harder than it appears. I make it look easy.
  • Haven't googled it yet but I have no idea what It means Posted via Android Central App
  • Save you the trouble. It is suicide. (short definition) Posted via Android Central App
  • It's how Samurai (I think? or feudal Japanese in general?) committed suicide, particularly over dishonor etc. It involves a sword across your guts... Not sure what honor has to do with silly nickname shenanigans and phone preferences tho.
  • NoSexus has wet dreams about a T-Mobile merger with his darling Sprint. He will be disappointed.
  • First, that does not answer his question (typical for you). You worry quite a lot about my more than ample sex life. If it is a crush, I am do not go in that direction. Its ok for you, but please leave me out of it. In any event, worry about your own sex life. He has a hole in it from your needle and I would hate to see you lose your only friend, I do not have an allegiance to a carrier or a phone OEM. I want what is best, sorry it does not line up with your beliefs.
  • Sprint buying T-Mobile is what's ideal. This company can't even afford to do it. That's taking a huge amount of debt if they do... Brought to you by the Nexus M8
  • Nothing wrong with taking huge amounts of debt at historically low interest rates
  • Except that the interest rates go up and you cannot afford the debt. At that point T-Mobile goes into the crapper.
  • You don't borrow money with a floating rate
  • LOL -- when you go begging for money you take what terms the bank gives you. It does not necessarily mean an adjustable rate but that CAN be factored in. Here is a tidbit for you: However, debt covenants are often much more convoluted and carefully tailored to fit the borrower's business risks. Some of the more restrictive covenants may state that the interest rate on the debt increases substantially should the chief executive officer (CEO) quit, or should earnings per share drop in a given time period. Covenants are a way for banks to mitigate the risk of holding debt, but for borrowing companies they are seen as an increased risk.
  • Who said anything about borrowing money from a bank?
  • Iliad said the cash portion would be financed via a combination of debt and equity. Iliad added that it has the support of leading international banks for the acquisition debt; meanwhile, the equity portion would be about €2 billion, and Mr. Niel would participate in the capital increase.
  • No banks mentioned.
  • Not specific banks but it says that the debts are financed by banks.
  • Its still a lot of debt. I don't think this is gonna pull through. Softbank will just throw more money at T-Mobile. Brought to you by the Nexus M8
  • As I said above, this is just like Dish/Sprint/Clearwire.
  • T-Mobile will likely become the #3 carrier in the USA by next quarter - before the end of year for sure. They should put any mergers on hold for the time being and see where this goes. Sprint will only drag the company down. I have no idea who these french folk are but maybe T-Mobile should buy them.
  • T-Mobile cannot. They are owned by Deutch Telekom and the EU regulatory agency would never allow that to happen. Sprint/T mo is the only way they both do well. They both know it.
  • T-Mobile can go it alone. Once Sprint stops bleeding customers and completes the update of it's network, we can revisited this. With the amount of debt both Sprint and T-Mobile are loaded with, I fail to see how anyone would think a merger is a good thing.
  • Because in one swoop you solve 3 problems 1. Sprint has poor building penetration
    2. Tmo is terrible away from cities
    3. neither has the customer base to truly compete with VZW and ATT Softbank will absorb whatever debt that Sprint has and shake it off like it is nothing. DT will not put another dime into TMO and have been trying to ditch it for years. TMO revenue per user is still going down, and I am willing to bet that cost per customer has gone up again. That is unsustainable. Acquiring Tmo would speed up the Sprint LTE because they would not have to build out as much. 2 strokes of the pen and you have a SOLID company that can go after the competition.
  • Well said.
  • and hence my reason for no merger. Everything here favors Sprint. A company that should have died years ago. I could care less about competition with the Darkside. Their business model is old school and will soon fail., T-Mobile is presently getting it's network up and running outside of major cities. Sprint is a worthless mismanaged company and should be put to rest. Joining the Wildchild with a dinosaur is not the answer. This merger will only benefit VZW and ATT.
  • Maybe you missed it, Sprint is under new management. Softbank acquired them about a year ago. Hesse is just the figurehead and day to day middle manager. He gets his orders from higher up Besides, we do not know what the management structure will be with the combined company. I could be that John L is in charge. You need to pay attention to Att and VZW do because if you like it or not, the tail does not wag the dog. They still set trends and policies. The stuff that T-Mo and Sprint has done has caused some shifts in thinking, but in reality it has jsut cause ATT/VZW to announce some plans to mimic tmo/sprint but in most instances the prices for the leaders have still gone up. It is just marketed differently Finally if you did not see any advantages in what I wrote for Tmo, then you are just being obstinate.
  • How does this only favor Sprint?? Do you forget the spectrum that sprint holds? Spectrum is what all companies want and sprint has a shit load of it.
  • You don't solve very much in one swoop,
    T-mobile's building penetration is no better than Sprint's
    T-mobile is GSM and Sprint is CDMA, no text or voice improvements until one of them switches or they deploy VoLTE Sprint will benefit from T-mobile fast LTE network, that is the only change that will be accomplished quickly and T-mobile will some additional LTE areas that they don't already cover.
    Sprint and T-mobile's native network coverage is actually quite similar. Sprint seems to have much better coverage but it's really just the fact that they roam on Verizon.
    National Coverage concerns won't improve that dramatically. The two carrier together in no way make an AT&T or Verizon instantly.
  • Using both Tmo and Sprint, in an area where they both have good LTE, Tmo is a clear winner in building penetration The CDMA/GSM thing has been beaten to death. It is not an obstacle as Tmo just proved with the MetroPCS buyout. You do not need VoLTE to accomplish this, you just need LTE (it is GSM no matter what) and LTE-A is already starting to come about (and that kills both regular GSM and CDMA). If you feel that Tmo and SPrint have the same footprint, you have never used both at the same time. They are very different. Tmo has the cities blanketed and Sprint has everywhere in between as well as the cities. (they are a bit weaker in the cities but still covered there as well). Sprint does roam on Verizon, and vice versa, but I almost never hit a spot where I am roaming so that point it moot. When I talk abotu the two combining to get to the level of Att/VZW I am talking in therm of customer base. In that regard they are still in third but within a few million, not 50 million away like they are now.
  • The Tmobile / MetroPCS combination doesn't prove that CDMA/GSM combinations are no problem, because the two carrier's didn't really merge networks. T-mobile shut down or is in the process of completely shutting down the Metro PCS CDMA network, they kept only a few of their LTE networks but by in large just shut down MetroPCS and are reusing the spectrum. I should know I'm a MetroPCS GSM customer, it's essentially just a T-mobile mvno at this point. You can't do that with Sprint / T-mobile because if your right about the coverage differences (and maybe you are) they need each other's networks in improve voice and data coverage in each others weak areas. Rural for T-mobile and cites for Sprint. Their is no magic sauce to combine those voice networks easily. You can combine data easily as they are both LTE, voice not so much with cdma in the picture.
  • The point is that LTE is strictly a GSM-based technology. As we continue on down this road all of the carriers will technically be GSM networks.
  • Fun fact, HSPA (and 3G) is a CDMA technology (WCDMA). Next fact, LTE is GSM. More facts, phones do not have specific radios for specific carriers. They have one radio that is locked into a certain carrier. Through both a hardware and a software solution, you can make all phones work on all carriers. The most hands on example that I have is the ReZound from Verizon. It was turned into a world phone after being strictly CDMA locked to verizon. Another fact LTE-A is GSM and everyone is moving toward LTE-A, both CDMA and GSM alike for the next generation of network (5G). At the very least there is your magic sauce. Bottom line is that with a hardware and software solution you can have sprint and Tmo combine and never touch a thing on either network. You have a phone that supports BOTH GSM and CDMA and software that determines which signal is better in any given area and switches to that network. This is not a difficult thing to do. It certainly is not magic
  • Finally, someone speaking some common sense to the T-Mo Fanboys! Nice job.
  • A combined TMobile and Sprint would still have less debt than AT&T and VZ by a huge margin.
  • Oh I forgot. To cannot go it alone. They cannot buy out the DT portion so they have very little if any control of what happens Posted via Android Central App
  • I am personally against any merger that would further consolidate the number of cell phone carriers. There has been enough of that already. Competition is good for consumers. T-mobile has a marketing strategy that is not compatible to Sprint. With a Sprint/T-mobile merger, who's marketing strategy would be used? Sprint is still using the 2 year contract model and T-mobile has done away with contracts. And then there are the network issues: CDMA or GSM?
  • CDMA/GSM is not an issue They have more in common than different. Combining the two would align the combined entity with ATT and VZW in terms of customers on both pre and post paid. Neither Sprint nor Tmo needs to change the business model when you have SprinT-Mobile they jsut need some of the policies to tile a bit more towards Tmo than Sprint (for instance the Music deal they just announced) and combine things.
  • Marketing/plan policies are the easiest thing to change by far, probably the least of their concerns... They do share some common ground too anyway, both still offer unlimited data plans. Oh and Sprint has some off contract plans, or did about a few months ago, they just never advertise them. IIRC it was about $60 for unlimited data (no clue about minutes), I didn't bother looking into it further because I'm already off contract and I already pay only $64 thanks to a discount (that I'd likely lose), no point tossing away the opportunity to get a $600 phone for <$200 to save $48/yr (even tho I'm currently using a Nexus 5).
  • I'm kinda torn on T-Mobile being bought out by anyone right now. I get DT wants out of the US market, but if Son is serious about trying to greatly improve mobile broadband in the US by buying T-Mobile and having competitive pricing against VZW and AT&T, maybe it wouldn't be so bad. Just have to convince all the regulatory bodies.
  • I think its better than Sprint.
  • How?
  • 1) Sprint has changed it's network technologies far to many times! Any idea how much it cost them? They out them selves where they are. Money wise Sprint is in a bind. 2) Customer service was lacking when I had their service. The network is broken. Unless your in a bigger city your coverage left a lot to be desired. Plus lets be honest here...Sprint just can't afford it. Simple! They need to put their focus on their current customer base and fix the network issues people are seeing. If they fix that then they might see their sub's jump more.
  • Changed their network tech too many times?!? What!!?? Sprint is not Ina money bind. Softbank has more money than they know what to do with.
  • 1. Sprint has always been CDMA. If you are referring to WIMAX, then you do not understand why they did that. They had to put that in or lose something more valuable. They had no option since LTE was not ready. 1a. Sprint does not have the money, maybe, but then again it is not Sprint buying Tmobile. It is Softbank, Sprints parent company, and they have more than enough. Money is not an issue here./ 2. I can agree with Customer service, as compared to Verizon (my only point of reference) and said that above in another comment. Unlike Tmobile, Sprint is expanding its network and really has a plan. It is going way to slow for my liking, as well as everyone elses, but it is there. Joining with Tmo provides more coverage for more people at a vastly reduced cost. It fixes both of their networks. Again, money is not an issue.
  • You need to say money is not an issue about 100 more times, then maybe, just maybe people might understand that.
  • I think it is easier to add to my signature Sent from the Sprint network, now owned and financed by SoftBank Maybe people would get the hint that this Sprint is not the Sprint from a few years ago
  • What do you mean by T-mobile is not expanding? They are putting LTE where they had 2G, and they seem to be doing it faster than Sprints LTE upgrades at least in my area.
  • That is not expansion, that is upgrading. HUGE difference. Sprint is replacing every piece of equipment, reevaluating towers and redoing the entire network. Just in the shear scope of things it is going to be slower and longer.
  • Spending resources expanding where they don't currently have customers seems a little counter productive to me. They have their 700 MHz spectrum broadcasting signal later this year, which will broadcast a signal much further than any other spectrum they have. They should be focusing on deploying that first and filling in the gaps later especially if the customer base doesn't exist in the locations where they have the licenses.
  • Thus the merger. Both win with it.
  • Sprint has been CDMA forever. They bought Nextel for spectrum, not technology. They had no choice but to partner with Clearwire for the WiMax debacle. If they didn't put that spectrum to use they were going to lose it and LTE wasn't ready yet. It was a huge waste of money, sure, but it was still cheaper than losing bandwidth and spectrum and then having to buy it back from the FCC at auction down the road. I've always been happy with their customer service and I am extremely happy with the LTE rollout in the Southwest US. I travel all over SoCal and into AZ and the network is getting better everyday. Literally every day. You are right that Sprint can't afford this. But SoftBank can. Easily.
  • +1 Sprint is also excellent in the Harrisburg to NYC to Philly to Baltimore to DC and back part of the country. Customer service end could improve (or maybe Verizon jsut had me spoiled)
  • VZW CS must be fantastic, I'm super satisfied with Sprint's CS after switching from AT&T (and still dealing with it at least once a year, as my parents/sister are on AT&T and they come to me with anything). AT&T store reps completely screwed up my parent's account (which I used to be on) and changed up their plan more than once, without permission (after talking face to face in store but not agreeing to any changes). Seems unfathomable but it happened more than once and in store CS is still a slow mess. You could maybe blame that on local training/management, but then they also outsourced phone support to Mexico or something and the Spanish they speak isn't exactly what we speak in PR... ;P Phone CS isn't great either regardless of linguistics. OTOH, Sprint CS has given me a free Airave, a free upgrade the year they killed yearly upgrades, AND an economical contract buy out option the year after that to upgrade yet again (that's how I went thru all three EVOs). More recently they restored 350 bonus minutes I had and somehow lost at some point (not that I use them but still), it was an out of the blue opt in offer to begin with. Never been hassled or even talked to about switching plans, and I have a long standing student discount they've never tried to stop either. About the only time CS ever disappointed a little was with Nexus 5 activations... I did hear some horror stories about that, tho getting my own SIM was a snap; once I clued in the store rep anyway and he did some research, he was hesitant cause I didn't have the N5 on me but eventually handed it over. Phone activation took a little bit but that was about the worst of it. I reeeeally hope they keep supporting the Nexus line, or Silver or whatever.
  • Yeah vzw was awesome when I had them. Insurance replacement? They would send you one and then send yours back (sprint has you go to a store) Billing issues could be handled on the phone with vzw, I have to go to a store for mine. It's the little things Posted via Android Central App
  • Really? I thought Asurion could handle insurance stuff for Sprint over the phone/mail, never had to use it myself while I paid for it thankfully. I've handled billing stuff over the phone just fine, tho it's been minor stuff like that minute bonus I lost or the one time they charged me pennies for phantom texts from Spain. I avoid the stores as much as possible but Sprint's are usually empty here... ;p Probably not a good sign tho. AT&T has two large stores in the same mall and you still have to take a number for service, every time.
  • I had a charging issue with a vzw phone, the next day aired a replacement, same with a sprint phone and they had me take it to a store, have it checked out then waited 2 days for the replacement to come to them only for me to drive the twenty-five miles to pick it up. They added insurance to a line I don't need, sprint told me to go to a store to have it removed. Vzw took care of that stuff on the phone. I am not saying sprint is terrible, but in my slight experience is is not all great either Posted via Android Central App
  • That's weird. Sounds like you've just had some poor CS reps on the phone. Honestly at my sprint store I work at, we used to never take insurance off in the store and have people call in to do it because it would affect our insurance attachment rate metric lol. but now that its not as big a percentage of our numbers we don't really mind. and yea that makes sense they sent you to a repair center to have it diagnosed prior to having it replaced, but they should have been able to ship the replacement phone to your address instead of back to the store. like i said, lazy folks work everywhere haha. but i have heard great things about vzw cs
  • Do you work for an actual sprint store or one they contract to? Most of the ones in my area are actually shentel and I think that is where the warranty replacement issue may come in. I was OK going for the diagnosis, but was pissed at having to go back. I have had said though vzw would have spent 20 minutes on the phone and just overnighted a replacement. Not sure what the deal is with having to go to the store to get the insurance taken off the one device Posted via Android Central App
  • Can't you just do that online tho? I'm almost sure I turned off my insurance from account management online, right around the time I decided to get the N5.
  • Yeah you can turn it off, but getting credit for the last 2 months is another story...
  • Ya Az is growing like crazy!!! Posted via Android Central App
  • Not sure who this new player is bidding and I hate sprint I'm with tmobile what ever happens I hope it just allows tmobile to improve there network coverage Posted via Android Central App
  • Nope it will not allow this. It is a homeless guy (tmo) borrowing money from an illegal immigrant (Iliad). Neither will have the money.
  • Yup lliad is betting the house on this. Softbank is playing with milk money. Posted via Android Central App
  • I like the idea of keeping 4 carriers "competing" hopefully it continues no matter what the outcome for T-mobile US is.
  • I'm not so sure that DT is so anxious to sell T-Mobile anymore. They are in substantially better business shape than they were pre AT&T buyout. They've completed most of their network upgrade, so they don't need a big cash infusion for that. If they can finance the upcoming spectrum auction purchases on their own then DT may prefer to hang on. They still have a ton of room for growth, and margins in the US are better than most other markets as we see by Verizon and AT&T profits. Posted via Android Central App
  • THey are still wanting to offload. Tmo is still carrying 8.7 billion in debt, and DT does not want to invest in a 4th place carrier that has no chance of seriously gaining any ground. They have invested everything they are going to into T-MO USA and now it is time for a return
  • RE: the update That bid is nothing at all 15BN for 56%? That will get rejected by DT without even a thought. This is a non-story and it looks like someone decided that they needed to just inflate their market cap artificially.
  • Did Softbank ever publicly talk numbers? I seem to recall them stating they had a board approved offer but I've no clue what it was or if it was ever officially proposed to DT. I don't think dragging this on benefits anyone tho, not like DT is getting any better offers (exhibit A here), time to rip off the band aid IMO.
  • It is in the 36-42bn range for 100%. No not totally official but that comes within 2 months (sooner I believe but I have to have troll protection) Posted via Android Central App
  • The rumored SoftBank bid values T-Mobile at $40 a share as opposed to $33 for Iliad and SoftBank was proposing buying a greater portion (near 100%) of DT's ownership interest.
  • There's a bunch of CFO's in this thread
  • There's is a bunch of common sense in this thread Fixed that for you
  • Lmao nice
  • It doesn't take a CFO to tell this was a low-ball bid.
  • Apparently DT rejected this.
    Posted via Android Central App
  • Figured that would happen. Thought it might take a day or so though
  • What I don't understand is why people choose AT&T and Verizon when they don't offer unlimited data anymore. Sprint and T-Mobile are the only ones who do that. T-Mobile's "Uncarrier" marketing and "Simple Choice" plans were big successes.
  • Simple answer: coverage. I just got in the Air Force, and my first base won't have very good Sprint service and no T-Mobile service whatsoever, but excellent coverage on Verizon and somewhat lesser coverage on AT&T (if their own coverage maps and Sensorly are to be believed). Sure, Verizon and AT&T's prices are higher, but I'd rather have service than little to none.
  • That is the million dollar answer there. I had to wait until Sprint was as good as Verizon in my area before I left (before anyone says anything, it is as good). Even then I was taking a chance it was gonna suck where I travel, thankfully it didn't Posted via Android Central App
  • Well, that's the reason that people who do their homework choose them anyway... I'm willing to bet there's just as many people that either got suckered and/or did no research, or they've just stuck with the carrier they've had for the last 5+ years. Inertia, laziness, and ignorance are sadly huge factors in this market; it's not like home broadband or something where you truly don't have a choice...
  • Ewww French.... Posted via Android Central App
  • Anyone else more entertained by this comment than all the rational and solid discussion posted before it? :-P Posted via Android Central App
  • Mon Dieu! C'es ne est pa posible... Ok, that's about as far as three years of HS French got me.
  • Update: According to New York Times DT has rejected the offer! Posted via Android Central App On My T-Mobile LG G3
  • All I know is that I don't want Sprint taking over T-Mobile I came to T-Mobile to get away from Sprint. Posted via Android Central App
  • This was great news. Too bad the offer was rejected.