When French telecommunications company Iliad announced its interest in acquiring a controlling stake in T-Mobile U.S., the surprise $15 billion bid drew a collective “Whuh?!” in this country.
Here’s what we know so far.
What is Iliad? — the company, not the poem
The French telecommunications company is a relative newcomer to the wireless business. Iliad’s roots are in high-speed Internet access, which it provides under the “Free” brand. It jumped into the mobile market two years ago, and now boasts about eight million subscribers — most of whom are in France. Coincidentally, Iliad is now France’s fourth-largest provider (just like T-Mobile in the U.S.), behind bigger players like Orange (with some 21.3 million subscribers in France alone).
Who is Xavier Niel?
This billionaire technology entrepreneur is the founder and majority shareholder in Iliad. He broke into the industry as a teen, running adult chat sites, according to the Financial Times. By the age of 25, he launched the country’s first Internet provider, WorldNet, a business he sold seven years later for more than $50 million. With Iliad, Niel played the role of living room disruptor with the Freebox, which brought Internet, TV and telephone into the home. In addition to his telecom holdings, he actively invests in technology startups and owns an interest in French newspaper Le Monde. Oh yeah, he has also dabbled in the peep show business.
What prompted Iliad’s bid for T-Mobile?
Iliad’s founder has been itching to strike a deal, having mulled potential partnerships with (or investments in) SFR and Bouygues Telecom, France’s second- and third-biggest wireless carriers, Bloomberg reported. Regulators rebuffed his overtures for Vivendi SA’s SFR, and Bouygues Telecom’s owner, the Bouygues SA, declined to sell, the publication reported. Niel also has holdings in Monaco and Israel, where he owns part of operator Golan Telecom.
T-Mobile is Niel and Iliad’s boldest move yet. In a statement acknowledging its bid for the fourth-largest mobile carrier in the U.S., Iliad said such a deal would likely secure approval from regulators, who have expressed antitrust concerns about a potential combination of T-Mobile and Sprint, the fourth- and third-largest U.S. operator. And the bigger company would give Iliad a foothold in the U.S. market.
What are the prospects of Iliad trumping Sprint?
Such negotiations are opaque, at best. Some sources believe SoftBank-backed Sprint has an edge, because its offer is believed to be more lucrative. Others say T-Mobile’s majority holder, Deutsche Telekom, could find Iliad’s offer more appealing for its easier path to regulatory approval.