Speculation that French telco Iliad was preparing to bid for a larger slice of T-Mobile US sent the Deutsche Telekom subsidiary’s stock up 2.45% to US$28.8 yesterday. Iliad initially bid to buy 56.6% of T-Mobile at the end of July for US$33 per share…
Speculation that French telco Iliad was preparing to bid for a larger slice of T-Mobile US sent the Deutsche Telekom subsidiary’s stock up 2.45% to US$28.8 yesterday.
Iliad initially bid to buy 56.6% of T-Mobile at the end of July for US$33 per share which was dismissed out of hand by the German incumbent.
Now the Xavier Niel-owned maverick is hoping that Deutsche Telekom will be tempted by a renewed US$33 per share offer to acquire a bigger stake in the US operator, according to people familiar with the matter cited by Bloomberg.
However, the price is some way off the US$40 per share which was mentioned when a merger with rival Sprint Corp was on the table. Talks over that tie-up ended in August due to anticipated regulatory hostility to consolidation.
Executives at Deutsche Telekom reportedly view at least US$35 per share as a fairer price, although the company’s board is rumoured to have become divided in recent weeks as it weighs holding on to T-Mobile, given that it is growing, or continue pursuing its long term goal of cashing out and leaving the US market.
Iliad, which experienced a 1.6% drop in its share price yesterday, has set an end of October deadline to reach a preliminary agreement with Deutsche Telekom and has had some success securing financing partners as it looks to raise US$5bn, the report said.
Last month Iliad’s management was reported to have held talks with a number of US banks and investors, including private equity firm KKR, in an effort to improve its earlier US$15bn offer.
Another interested party is Dish Network. The DTH provider’s chairman Charlie Ergen was reported to have rung Deutsche Telekom’s management to tell them that he was open to buying its US subsidiary. However, Ergen would not make a move until after the AWS-3 auction, scheduled for 13 November.
Speaking on a results call in early August, Ergen said: “The auction is going to tell us kind of where we stand on a baseline value as a company … There’s going to be a reset of values for this mid-band spectrum.”
Ergen anticipates the value of Dish’s spectrum to be higher than the market expects following the auction, and thus is reluctant to do business before then. A higher valuation would give Dish more options to finance any potential deal.
T-Mobile has US$14.4bn in long-term debt. Last year it generated US$24.4bn in revenue and US$4.9bn in EBITDA. In its Q2 results, it said it had 50.5 million customers, closing in on number three mobile operator Sprint Corp, which disclosed 54.5 million in its last quarterly report.
