As Iliad gives up on the U.S., all eyes turn back to France

With what appeared to be a Gallic shrug and a large sniff in the best traditional style, Iliad this week finally abandoned plans to buy T-Mobile US, thus ending a period of intense speculation over what Iliad owner Xavier Niel might offer next for the Deutsche Telekom-owned operator.

"The Iliad Group announces that it puts an end to its project of acquiring T-Mobile US, following exchanges with Deutsche Telekom and selected board members of T-Mobile US who have refused to entertain its new offer," the company said in a statement.

Iliad first confirmed its interest in the U.S. market back in July, when its initial plan to buy a 56.6 per cent in T-Mobile US was greeted with some incredulity. It was nothing if not a bold move, but audacity has been the hallmark of Iliad's march through the French market: the company's Free Mobile unit turned the country's mobile market on its head with the launch of low-cost offers in January 2012, for example.

Iliad confirmed that it did raise its offer to $36 (€28.46) per share for a higher stake of 67 per cent, after putting in place a consortium with two private equity funds and international banks.

Now that this bid has also apparently failed to find favour with Deutsche Telekom, Iliad could turn its focus to other markets and, more specifically, France, although the company has also been thwarted here in its previous efforts to reach a deal.

Indeed, before Iliad targeted T-Mobile US, Niel focused a gimlet eye on a possible merger in his domestic market. Rival operators may have breathed a sigh of relief as he temporarily turned his attention elsewhere, giving them time to brush up their strategies and, in the case of Bouygues Telecom, define a structure that would enable it to exist in a market with four players.

The markets are certainly responding favourably to rumours that French consolidation could be back on the agenda, with Iliad shares bucking the general trend on Tuesday to rise 13 per cent following the withdrawal of its U.S. bid. Bouygues' share price also opened 3.6 per cent higher on renewed French mobile consolidation hopes, and Jefferies analysts commented that Orange should benefit from renewed hope of French consolidation now that Iliad has terminated its attempts to acquire T-Mobile US.

For now, Iliad is keeping quiet on its future plans.

"The Iliad Group will continue its profitable growth policy as it has been conducted over the last 15 years in the interest of its subscribers, employees and shareholders," the statement continued.

Based on the group's record so far, it's likely that M. Niel could have a few more surprises up his sleeve.--Anne

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