My Way: Xavier Niel wants to buy T-Mobile in the United States

by bold-lichterman

Update September 22, 2014: According to Reuters, Iliad should make up his mind by mid-October. The company of Xavier Niel is said to be in talks with several investment funds, including KKR, to raise more than $ 5 billion.

Update August 25, 2014: According to a New York Post article dated August 19, Iliad is looking for financial support to strengthen its offer on T-Mobile. Xavier Niel would have met representatives of large American groups including Google and Microsoft in this regard.

Iliad confirmed its interest in T-Mobile, the fourth largest mobile operator in the United States. Free’s parent company has submitted an “indicative offer” to the supervisory board. This was approved by its entire board of directors.

“Iliad offered $ 15 billion in cash for 56.6% of T-Mobile US, at $ 33.0 per share. Iliad values ​​the remaining 43.4% of T-Mobile US at $ 40.5 per share based on $ 10 billion in synergies benefiting T-Mobile US shareholders. This leads to an aggregate value of $ 36.2 per share, or a 42% premium over T-Mobile US’s unaffected stock price of $ 25.4 per share, ”the company explains.

Nothing is played yet

To finance the operation, the French group will use its own funds – up to 2 billion euros, and the participation of Xavier Niel, whose fortune is estimated at more than 8 billion euros, to a capital increase – and will raise debt for which he has secured the support of several banks. He estimates the possible synergies at 10 billion dollars.

But nothing has yet been acquired in the current state of the matter. Sprint, the third American mobile operator had also planned to issue an offer on T-Mobile, now 67% owned by Deutsche Telekom, next September according to several media. The French telecoms troublemaker is also the first to remain cautious: “nothing guarantees that Iliad’s offer will be accepted by the board of directors of T-Mobile US and that it will result in a transaction” specifies- he does.

50.5 million customers

First cooling, Deutsche Telekom would consider Iliad’s offer, according to Bloomberg, as less competitive than that formulated by SoftBank, the Japanese Internet services giant and owner of Sprint. This American ambition remains however a first for the French company totally absent from the North American market. “T-Mobile US has successfully established itself in this market through its disruptive positioning which, in many respects, is similar to that of Iliad in France,” one explains.

In the second quarter, T-Mobile had gained 1.5 million additional customers allowing it to reach 50.5 million customers in the United States for a turnover of 26.1 billion dollars. On 4G, the company claims to already cover 325 metropolitan areas for coverage reaching 233 million people.

Four operators

In 2011, AT&T had already tried to get its hands on T-Mobile with an offer of $ 39 billion before throwing in the towel when the competition authorities refused to accept a market with four operators. A scenario that Iliad brushes aside, believing that, not being present in the United States, the operation “should not pose any difficulties with regard to the rules relating to competition law”.

Xavier Niel recently explained to Frenchweb, jokingly, that he was only known in the United States for being the owner of My Way, the American takeover of the title As usual by Claude François for which he holds the rights to the catalog. It could change.