French upstart Iliad threatens to upset the telecoms apple-cart with an audacious $15bn dollar offer for T-Mobile US. But can it succeed in elbowing aside Sprint in its bid to grab a share of the U.S.'s large and lucrative market? Sara Hemrajani reports.
The ongoing courtship between telecom giants T-Mobile US and Sprint has been given a sudden jolt by a French upstart. Iliad has now made a bid of its own for T-Mobile US, offering $15 billion in cash for just over half the company. This paves the way for a battle with Sprint's owner SoftBank, who's been in talks to buy T-Mobile US for months. But that merger has been stalled by the American communications watchdog. Regulators have made it clear they don't want to see further consolidation at the top of the industry - and this is where Iliad may have the edge. The discount mobile carrier is said to believe its bid is unlikely to involve an anti-trust investigation since it wouldn't change the number of companies operating in the US. Still, some say Iliad's billionaire founder Xavier Niel could be reaching beyond his scope. Reuters Breakingviews' Quentin Webb. SOUNDBITE: Quentin Webb, Columnist, Reuters Breakingviews., saying (English): "Well it's a sort of step change for him. He has already transformed French mobile with a very low cost offer and built sort of 13% market share in just a couple of years. But the US is a much bigger market. He's sort of straining at the seams to kind of raise the financing to do this, and taking on SoftBank, which is already intending to merge the unit with its own Sprint." Iliad plummeted as much as 13% when its offer was announced - the stock's biggest drop in eight years. Many traders say the French firm's price for T-Mobile US is too low to be considered seriously. But, according to Titan Investment's Darren Sinden, this is a win-win situation for Iliad. SOUNDBITE: Darren Sinden, Titan Investment., saying (English): "So Iliad, why not, they're innovative, they're cheeky, they've put something on the table. If they get it, they'll have done very well. If not, they've really not lost anything and they'll have raised the profile considerably by making a bid, and no doubt they'll have another target in mind in due course." Whether its audacious move proves successful or not, Iliad's actions could encourage other foreign telecoms to take a closer look at the lucrative US market, giving the sector a real shake-up.