France’s fourth-largest cellular company Iliad bids for T-Mobile

France’s fourth-largest cellular company Iliad bids for T-Mobile

On Thursday, Iliad SA, France's fourth-largest cellular company, made the highest bid for the takeover of T-Mobile US Inc.

Most of the analysts are of the view that if this deal takes place then it would make very little sense as in the future Iliad will offer little obvious benefits to the prospects of T-Mobile. This is so as Iliad has no US operations, so it would not bring any additional US subscribers to T-Mobile or its network.

If Sprint mergers with T-Mobile then they both would create a new No. 3 US carrier, big enough to take on No. 1 Verizon and No. 2 AT&T. This would be easily possible as both T-Mobile and Sprint roughly will make up the same number of subscribers that each of these giants have.

Mergers are usually done looking at the aspect of economies of scale but through the Iliad merger, no economies of scale will be generated.

Iliad offered $15 billion, or $33 a share, for the roughly 57% of T-Mobile now owned by Deutsche Telekom, based in Germany. Although T-Mobile has acknowledged that it received the offer, they have not yet commented further.

The idea behind the Iliad deal is that this small French company will eventually find a reason to own a fourth-place US carrier. Though, according to some analysts, the $33-a-share bid offered by the company probably won't be enough.

Sprint, on the other hand, has worked out the broad terms of a $32 billion deal to buy T-Mobile at roughly $40 a share. But till now, neither of the two companies has commented on a possible deal.


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