French company Iliad is not willing to pay more than the initial $33 per share it offered for a 55.6 percent stake in T-Mobile last month. However, the company's offer still stands and says it "could evolve" as Iliad pursues a major share in America's fourth largest mobile carrier.
In a press conference in Paris on Monday, Iliad chief financial officer Thomas Reynaud said that the French mobile carrier is rounding up its forces and forging alliances with private equity firms, U.S. buyout firms and sovereign-wealth funds to chip in and make a more lucrative offer to T-Mobile.
"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)," says Reynaud.
In August, German company Deutsche Telekom, which owns a majority stake in T-Mobile, rejected Iliad's offer of $33 per share or $15 billion on the grounds that the offer was too low. However, Deutsche Telekom executives reportedly tipped off Iliad that it could reconsider if the offer was increased to $35 to $40 a share.
This comes hot on the heels of a failed T-Mobile acquisition by rival mobile carrier Sprint following concerns that Sprint could face regulatory scrutiny because the proposed merger would turn America's four national carriers into three.
Deutsch Telekom, which makes a fifth of its profits from T-Mobile, has been trying to sell its shares since 2011 because it believes T-Mobile is too small to compete with AT&T and Verizon.
Iliad shares slid by 8.8 percent on the Parisian trading floor following Reynaud's announcement that the company will continue to pursue T-Mobile, indicating that investors see the deal as a risky move. Analyst Stephanie Beyazian at Raymond James gives Iliad an "underperform" rating and says investors are more eager to see Iliad focusing its efforts on consolidation in France.
"It's clear that Iliad prefers the U.S. option compared with going back to the table to negotiate to buy out Boygues and consolidate France," Beyazian says.
Earlier this year, Iliad participated in informal talks with Boygues Telecom, the third largest mobile carrier in France, about a proposed acquisition, but the negotiations died out supposedly because the two companies had very different expectations on the price.
Other potential suitors, including Dish Network Corp., are gunning for ownership of T-Mobile shares, but Iliad believes it is the most suitable owner of a mobile carrier that brands itself as the "Un-carrier."
T-Mobile's practices are made to shake up the mobile industry, but Iliad's Free Mobile could bring the entire industry down to its knees. Free Mobile offers two extremely aggressive pricing plans at €2 or $2.63 a month for 120 minutes of calls, unlimited text and 50MB of data and €20 or $26.26 a month for unlimited SMS and calls and 20GB of data.
