French carrier Iliad's surprise unsolicited bid for T-Mobile US may be good news for everyone but Sprint.
Iliad confirmed on Wednesday it has offered to buy a majority stake in the fourth-largest U.S. mobile operator in a deal that values the company at about US$30 billion. The news followed months of reports about an impending takeover deal with Sprint, the third-largest carrier, that's never quite materialized.
The Iliad bid may have been unexpected, but it's not likely to be unwelcome. U.S. regulators will see a potential deal that changes the ownership of T-Mobile without affecting the makeup of the domestic mobile market. Consumers would be looking at a scrappy U.S. carrier now owned by a French company that's specialized in undercutting bigger rivals in its own market. And Deutsche Telekom, the majority owners of T-Mobile, may have a bidding war on its hands.
As simply one foreign owner looking to buy out another, Iliad would face dramatically less government scrutiny than Sprint would as a domestic player asking to further consolidate the market, said analyst Roger Entner of Recon Analytics. If Sprint bought T-Mobile, the U.S. would lose one of the four competitors that now vie for customers, a prospect that some regulators have said they wouldn't welcome. An Iliad buyout would preserve the four-carrier market.
"It would probably be very easy to approve," Entner said. The only condition he sees in such a deal would be including someone on T-Mobile's board who's been approved by U.S. agencies, to safeguard national security, as was required when Japan's SoftBank bought Sprint last year.
Four competitors, especially with an underdog as aggressive as T-Mobile has been under CEO John Legere, could continue the battle for consumers that has led to several new types of plans and price points across the U.S. mobile industry over the past couple of years. Iliad is known for the same kind of disruption in French telecommunications, Entner said.
Deutsche Telekom, which has been looking to cash out of the U.S. for years now, may benefit most of all from the entry of a rival bidder.
The prospect of going up against a proposal with a much easier path to approval won't scare off SoftBank Chairman and CEO Masayoshi Son, who controls Sprint, Entner said. "Masa-san is not a guy who gives up. He's tenacious. He's pugnacious," he said.
Iliad said nothing about the status of its dealings with T-Mobile, only that it's presented the offer to the board. But assuming that Sprint's still trying to seal a deal with Deutsche Telekom as this goes on, the conversations may be about to change.
"The bargaining position of T-Mobile has become much, much stronger," Entner said.
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