Iliad in talks with private equity firms on T-Mobile US offer

Iliad is continuing to explore different ways of improving its bid for T-Mobile US, with latest reports saying the France-based company is now in talks with private equity companies on a possible collaboration.

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Iliad founder Xavier Niel

Iliad CFO Thomas Reynaud told Reuters that private equity funds and companies had contacted the French operator earlier in August about teaming up on the T-Mobile bid, and said those talks are continuing. He confirmed that Iliad is still interested in the U.S. company despite the rejection of its earlier bid by T-Mobile parent Deutsche Telekom.

Iliad originally made an offer of $15 billion (€11.4 billion) for a 56.6 per cent stake, valuing the U.S. company at $33 per share

According to an earlier report from Bloomberg, Iliad has been in discussions with U.S. buyout companies as well as companies and sovereign wealth funds to gain support for an improved offer.

Iliad held a press conference on Monday Sept. 1 to discuss its first-half results for 2014, and a slideshow of the company's presentation showed no improvement as yet on the original offer for T-Mobile US.

There are suggestions that the company's founder Xavier Niel is encouraged that Deutsche Telekom has indicated it would be willing to negotiate a sale if an offer values the U.S. mobile operator at no less than $35 a share.

The German group is understood to regard $35 to $40 as a realistic valuation range, Bloomberg reported.

There has been ongoing speculation about what Iliad's next move might be, including the suggestion that the French company was working with Dish Network, Cox Communications, Charter Communications and others to improve its offer for the operator. Cox Communications has since said it is not interested in joining Iliad's buy out.

Sprint and its parent SoftBank recently abandoned pursuit of a deal with T-Mobile because of regulatory concerns, according to multiple reports.

Meanwhile Iliad also said it is ahead of schedule on reaching its revenue target of €4 billion ($5.3 billion) in 2015. After the publication of its second-quarter and first-half results for 2014, Reynaud told Reuters that the company would likely reach 15 per cent mobile market share by the end of this year.

The company said revenue increased by 10 per cent year on year to over €2 billion in the first half of 2014, of which €746 million came from its mobile business (up 24 per cent). Group EBITDA grew by 7 per cent to €624 million, although net profit was down slightly by 1.3 per cent to €139.9 million due to tax charges and costs related to the LTE rollout.

The number of mobile subscribers rose by over 1 million in the first six months of the year. At the end of June, Iliad counted almost 9.1 million mobile subscribers and a market share of at least 13 per cent. The company's long-term goal is to reach a 25 per cent market share.

Iliad added that its 3G network would cover 75 per cent of the French population by the end of 2014, by which point LTE coverage would be at around 50 per cent of the population. The company has been criticised for its poor network coverage in the past, and for being too reliant on a 2G and 3G national roaming arrangement with Orange.

For more:
- see Iliad's results statement
- see the Iliad results slideshow
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article

Related Articles:
Report: DT willing to part with T-Mobile if it gets an offer of $35 per share or more
Cox president: We're not going to bid for T-Mobile
DT's chief says there are no good offers for T-Mobile US
Rumor mill: Iliad working with Dish, Cox, Charter and others to improve T-Mobile bid
Analysts: The benefits of an Iliad/T-Mobile deal are hard to see

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