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French firm Iliad sets sights on Deutsche Telekom subsidiary T-Mobile USA

French telecommunications company Iliad has confirmed that it is seeking a controlling stake in T-Mobile USA, saying the potential for developing a presence in the US market is “large and attractive”.

Paris-based Iliad said (2-page / 224 KB PDF) that it had offered $15 billion in cash for a 56.6% stake in T-Mobile USA Inc. The US company “has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France,” Iliad said.

Iliad said on 31 July that its offer was based on a price of $33 per share. Iliad said it valued the remaining 43.4% of T-Mobile USA at $40.5 per share on the basis of $10 billion of synergies to the benefit of T-Mobile USA shareholders. “This leads to an overall value of $36.2 per share, a premium of 42% over T-Mobile USA’s unaffected share price of $25.41,” Iliad said.

Iliad said the cash portion would be financed via a combination of debt and equity and that it had the support of “leading international banks for the acquisition debt”. The equity portion would be approximately €2bn, and Iliad’s founder and majority shareholder Xavier Niel “would participate in the capital increase”.

According to Iliad, the transaction “should not raise any anti-trust issue in light of the competition rules given that Iliad is not present in the United States”. However, the company said “there can be no certainty that the Iliad offer will be accepted” by the board of T-Mobile USA.

T-Mobile USA is a national provider of wireless voice, messaging, and data services and is a subsidiary of Deutsche Telekom AG, one of the world’s largest telecoms companies.

In 2013, Iliad’s earnings before interest and tax increased by 31% over the previous year to €541 million. Profit increased by 42% to €265m.

In a report on the telecoms industry published earlier this year, Deloitte said new business models were emerging among both traditional and new players “which could open up markets and change the landscape”. Mobile payments technology and the spread of communications services into the vertical markets were among areas “showing near-term promise”, the report said.

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