Sprint may have officially junked its ambitious plan to buy T-Mobile US, but there’s a big telecom industry out there and it has taken notice of the U.S.’s scrappy No. 4 mobile carrier. T-Mobile’s principal owner Deutsche Telekom has indicated its willingness to sell if the price is right, and French ISP Iliad is likely to make a new bid on the carrier soon. Meanwhile, Dish Network is waiting in the wings.
Iliad made an offer to buy more than half of T-Mobile’s shares last month when the Sprint–T-Mobile deal was still on the table, but T-Mobile dismissed the deal as too low. On Monday, though, Iliad CFO Thomas Reynaud said Iliad is talking to several international carriers and private equity companies about the possibility of making a joint bid for T-Mobile – one that DT won’t find so laughable.
What price would cause DT to prick up its ears? According to Bloomberg, DT is setting the minimum bid at $35 a share, though Reuters’ sources say that even $35 is too low. Iliad offered $33 a share for 57 percent of T-Mobile. Iliad claimed that “synergies” would create another $10 billion in value in the company, though it seems everyone from to DT to financial analysts is questioning Iliad’s arithmetic.
The other interested party could be Dish, which seems to be hovering at the edges of every mobile carrier deal of late. After Sprint gave up on T-Mobile, Dish chairman Charlie Ergen made a point of saying Dish’s options just got more plentiful. Dish has made overtures to T-Mobile in the past — and it’s a deal that everyone in the industry wants to see happen, as Gigaom Research’s Colin Gibbs recently wrote — but Ergen always has seemed far more interested in Sprint than its smaller competitor.
If Iliad or Dish did come up with an acceptable offer, either would probably face little trouble from U.S. regulators. The Federal Communications Commission and Department of Justice’s big beef with a Sprint-T-Mobile deal was that it would knock a major nationwide competitor out of the market. An Iliad or Dish deal would do neither.
An Iliad deal would change nothing in the U.S. competitive landscape – control of T-Mo would merely pass from one European telecom company to another. Iliad runs Free Mobile in its home country, and in its short existence has already captured 13 percent of the French mobile market due to its aggressive pricing. In that sense, it would be a good fit for T-Mobile, which is trying to do the same in the U.S.
A deal with Dish, however, could strengthen T-Mobile, allowing it to tap into Dish’s 4G spectrum and build a much more powerful LTE network. Dish doesn’t need to buy T-Mobile to make that happen, though; the two companies could merely partner. Since Dish has no mobile network or mobile carrier business, the two aren’t in competition.
Before the dust settles though we may very well see other interested parties in T-Mobile. As SoftBank’s purchase of Sprint shows, international carriers are eyeballing the U.S. AT&T and Verizon are effectively off limits due to their size, which makes T-Mobile the only game in town for any telco with American ambitions.