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Paris - French telecoms company Iliad has made a surprise offer for T-Mobile US, setting up a potential bidding war with rival suitor Sprint, the US mobile firm now controlled by Japan's Softbank.
Iliad, which has shaken up the French mobile and broadband market in the past decade with its cheap, pared-down subscriber plans, has bid $15bn in cash for 56.6% of T-Mobile US at $33 per share.
It said it valued the rest of T-Mobile, the fourth-largest US carrier and 66.67%-owned by Deutsche Telekom , at $40.50 per share, and expects $10bn of cost savings from the deal.
The move is the latest in founder Xavier Niel's audacious empire building in telecoms which now includes businesses in Israel, Monaco and France and in many ways makes him a similar figure to Masayoshi Son, the head of Softbank and now his rival suitor for T-Mobile US.
Both have operated their companies as challengers who cut prices and take on larger rivals with bigger resources.
Big bite
A person close to Iliad said that Niel believed Iliad had a strong card to play because its bid would not face the antitrust scrutiny that confronts Sprint in trying to merge the third and fourth-biggest US mobile network operators.
The US Federal Communications Commission (FCC) and Department of Justice (DOJ) earlier this year already expressed a desire to have at least two more network operators competing against the market leaders AT&T and Verizon.
Niel also sees the US market as ripe for the kind of challenge that Iliad mounted in France where its entry to the mobile market in 2012 sent prices down by 30% and hurt profits at bigger rivals Orange and SFR as well as Bouygues Telecom.
Iliad said its bid would be financed by a mix of equity and debt and already had the backing of unnamed international banks.
Nevertheless the deal would be a big bite for Iliad: Its market capitalisation of just above $16bn, compares to about $25bn for T-Mobile US.
"There can be no certainty that the Iliad offer will be accepted by the board of directors of T-Mobile US," the company said.
The offer was earlier reported by the Wall Street Journal.
T-Mobile's owner Deustsche Telekom will now have the benefit of two interested bidders for its US operation.
A person at Deutsche Telekom familiar with the talks also said a deal with Iliad had a certain appeal due to the reduced risk of it being blocked by US regulators as compared with a sale to Sprint.
Three years ago regulators rejected AT&T's agreed $39bn bid for T-Mobile US, which resulted in AT&T paying Deutsche Telekom as T-Mobile's full owner a reverse break-up fee of $6bn in cash and US mobile assets.
