France-based Iliad has reportedly given itself until the middle of October to decide whether to improve its bid for T-Mobile US or give up on efforts to buy the U.S. unit of Deutsche Telekom.
According to Reuters, which cited unnamed sources, the French operator owned by entrepreneur Xavier Niel is not having much luck in persuading the German parent company that it will be able to improve business at the fourth-largest U.S. operator, largely because Iliad has no track record in the U.S.
In addition, analysts from Jefferies recently said T-Mobile US would strike an M&A deal with another company only if they had U.S. spectrum, had a U.S. customer base and offered "favourable financial terms".
Deutsche Telekom, which owns 66 per cent of T-Mobile US, is widely understood to have rejected Iliad's initial $33 per share offer for a 56.6 per cent stake in the company. That offer valued the U.S. unit at $15 billion (€11.7 billion).
Since then, Iliad has reportedly been in talks with banks and private equity funds to help it finance an improved bid. The unnamed sources told Reuters that the French company could be in a position in the second week of October to submit an improved offer of between $35 and $40 per share for a stake of between 60 per cent and 90 per cent.
However, Deutsche Telekom is in no rush to sell, while Iliad cannot afford to continue its pursuit without support from the German parent due to the impact on Iliad's share price.
There has also been continued speculation that Dish Network might make an offer for T-Mobile US after the conclusion of the AWS-3 spectrum auction, which starts Nov. 13.
Sprint and its parent SoftBank have abandoned pursuit of a deal with T-Mobile because of regulatory concerns, according to multiple reports.
If Iliad's ambitions come to nothing in the U.S., it is considered possible that Niel will turn his attention back to the French market, where talk of further consolidation has died down in recent months.
- see this Reuters article
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