French mobile and Internet firm Iliad is still open to working with other companies to improve its offer for T-Mobile US (NYSE:TMUS), but it is not saying which partners it is exploring its options with, according to comments from Iliad CFO Thomas Reynaud.
Iliad in late July made a $15 billion bid for 56.6 percent of T-Mobile, valuing the carrier at $33 per share. T-Mobile parent Deutsche Telekom rejected that offer as too low.
Speaking after Iliad reported its quarterly results, Reynaud said several unnamed industrial and financial partners had approached the company since it first made its bid. "The offer we made is still pertinent but it could evolve, not specifically in terms of valuation, but on the percent of the capital (that Iliad proposes to buy)," he said on Monday, according to Reuters. "To ensure that these discussions go to term, we cannot tell you more about them this morning."
The Iliad CFO also indicated that working with a partner "is one possibility," and added that discussions about doing so are "ongoing." According to Bloomberg, which cited unnamed sources, Iliad is talking to private-equity firms about working to make an improved offer for T-Mobile. Reynaud said Iliad would limit any capital increase to fund a new T-Mobile bid to € 2 billion ($2.62 billion).
Bloomberg has also reported that at a strategy meeting on Aug. 28, Deutsche Telekom's senior managers discussed a price range of $35 to $40 per share as a realistic valuation range for negotiations over selling T-Mobile US. Deutsche Telekom CEO Timotheus Höttges said in August that there are no offers on the table that value T-Mobile more than it's currently worth as a standalone business, and any offer for T-Mobile would need to be worth more than that. DT reiterated that stance, according to the Wall Street Journal.
Shortly after Iliad went public with its offer for T-Mobile, Sprint (NYSE: S) and its parent SoftBank abandoned pursuit of a deal with T-Mobile because of regulatory concerns. "Our offer is probably even more pertinent today after Sprint pulled out of the race," Reynaud said, according to the Journal.
Reynaud said Iliad has not yet won access to T-Mobile's confidential financial information, but still thinks it can generate $2 billion in savings per year by running T-Mobile more efficiently, as it has done with its own business in France. Analysts, and presumably DT, have expressed skepticism over Iliad's claim that the deal will result in $10 billion in synergies related to cost cuts and other efficiencies.
Iliad published a chart detailing that 38 percent of the $2 billion in annual cost savings would come from spending less on network, capital expenditures and equipment; 24 percent would come from information technology and general administrative costs; 20 percent from customer management and 13 percent from marketing and advertising.
"We know we can't just copy and paste Iliad's model in France to the U.S.," Reynaud said, according to Reuters. "But there are some things that we do well, such as running call centers internally and boosting online sales that will translate to the new market."
- see this Reuters article
- see this FT article (sub. req.)
- see this Bloomberg article
- see this WSJ article (sub. req.)
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