T-Mobile to Iliad: Your Merger Offer Isn't Good Enough
T-Mobile is quite the attractive belle of the ball nowadays, with more than one company eyeing a takeover. Still, T-Mobile Chief Financial Officer Braxton Carter made it clear the company won't be sold that easily and that French carrier Iliad's $15 billion offer simply isn't good enough.
Citing low growth prospects, Carter told investors at a conference in Boston that Iliad's offer was "very flattering" but "a very inadequate value proposition."
"I think rarely people come with their best bid to start," Carter said.
He also hinted that T-Mobile is open to higher offers and that Iliad's founder Xavier Niel impresses him.
Iliad's $15 billion bid would give the company a 57 percent stake at $33 a share. Sprint, which has dropped its pursuit of T-Mobile, was willing to offer $32 billion for the company at $40 a share. That's not all, however. Iliad is a foreign carrier with little infrastructure in the United States. In order to grow in rural areas, a sector T-Mobile lags in, it would have to undertake massive expenditures. Sprint, however, could have provided T-Mobile with an existing national footprint to settle into.
Chief Executive of T-Mobile's parent company, Deutsche Telekom AG, Timotheus Höttges said last week that they are willing to part with T-Mobile but have "no offer on the table which increases value more than what we're developing organically."
If that's the case, then Höttges might see another suitor step up to the plate, one that's based in the United States: Dish Network. The No. 2 satellite provider in the United States has expressed interest in T-Mobile before but stayed out of contention while Sprint was in the game.
"We don't have the kind of money to go outbid Sprint for T-Mobile or outbid AT&T for DirecTV. So we have to be well positioned so, no matter what happens, it's all good for us, and I think we're there," Ergen said at a first-quarter earnings report conference call earlier this year.
"I wasn't a very good poker player, but when a bunch of drunken fools were throwing money around occasionally, I was able to pick up the pot at the end of the day," Ergen said. "My recommendation to our board would probably be let's see what happens."
Analysts also seem to agree that Dish Network could be T-Mobile's best option if it really needs to sell itself. The company owns around $26 billion worth of its own airwaves and could significantly help T-Mobile acquire valuable spectrum in the 2015 FCC auction.
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