Sprint May Not Lose Out To T-Mobile’s French Suitor

For the better part of 2014 we have been hearing endless rumor and speculation about a merger between Sprint and T-Mobile. The Softbank-owned Sprint is expected to acquire T-Mobile U.S. and cement itself as a true competitor for Verizon and AT&T. A formal bid has not been submitted as yet and Sprint’s chances of scooping up the no.4 carrier seemed to be in jeopardy when out of the blue a French telco called Iliad bid $15 billion for the company.

According to the Wall Street Journal T-Mobile U.S. has declined Iliad’s bid for a 56.6 percent stake. Iliad’s bid was unexpected to say the least and it wanted T-Mobile to open up its books so that it could conduct due diligence. Citing people familiar with the matter, the Journal says until the bid’s terms are improved, T-Mobile is not opening its books. One person is even quoted to have said that the offer was “dead on arrival” because the bid is too low for the carrier to consider.

However Iliad would have had a relatively easier time of getting the deal approved by regulators who are believed to not be too ecstatic about a merger between the no.4 and no.3 U.S. carrier. In case the bid was accepted it would not have been a merger between two U.S. carriers and regulators would not have to make their point of not seeing further consolidation in the market.

On the other hand the merger deal between T-Mobile and Sprint is reportedly valued at over $32 billion, more than double of what the French telco is willing to pony up. Softbank is already believed to have secured financing for the deal. It is believed that a formal bid will not be submitted until there’s sufficient cause for Softbank to believe that it will not be shot down by regulators, because if that happens the breakup fee alone for this deal could run into billions, as AT&T learnt much to its chagrin in 2011.

Adnan Farooqui
Categories: General
Tags: Sprint, T-Mobile