By Ruth Bender And Thomas Gryta
PARIS--Iliad SA has dropped plans to acquire a controlling stake
in T-Mobile US Inc., ending a four-month pursuit that would have
marked the French telecommunications company's entry into the North
American market.
Iliad said Monday its new bid of $33 a share for 67% of the
cellphone operator had failed to pique the interest of majority
owner Deutsche Telekom AG and some of T-Mobile's board members.
The French company's first offer of $33 a share for 56.6% of
T-Mobile had been rejected in the summer.
The $15 billion T-Mobile bid was seen as a bold move by Iliad
founder and largest shareholder, Xavier Niel, who has disrupted
France's telecom market by slashing prices. The French billionaire
had said he would rely on his low-cost savoir-faire to boost
T-Mobile's profitability.
As analysts questioned whether Iliad had the financial muscle to
pull off such a deal, the French company's stock kept sliding,
losing about 25% since Mr. Niel confirmed his interest for T-Mobile
in late July.
Iliad said on Monday it had secured support from banks and
private-equity funds to propose buying a larger stake in T-Mobile,
but that doesn't appear to have impressed Deutsche Telekom.
T-Mobile US declined to comment, and attempts to reach Deutsche
Telekom for comment were unsuccessful.
Iliad's departure could have ripple effects on both sides of the
Atlantic.
In the U.S., it leaves T-Mobile, the smallest of the nationwide
carriers, without a potential merger partner after 10 months of
expectations that a deal of some sort would emerge. Two months ago,
Sprint Corp. walked away from its plans to attempt a merger of the
two carriers amid strong objections from regulators.
T-Mobile CEO John Legere has defended the company's stand-alone
prospects but also has declared openness to deals with partners
such as Sprint, pay-television companies and investors from
overseas. Dish Network Corp., which lost out on a bid to acquire
Sprint last year, has publicly shown interest in T-Mobile but
hasn't made a bid.
The carrier spent years hemorrhaging subscribers before Mr.
Legere took the reins in 2012. It has added more than four million
of the industry's valuable postpaid customers since the beginning
of 2013.
Some on Wall Street question the company's ability to maintain
its growth trajectory when bigger companies like Verizon
Communications Inc. and AT&T Inc. have the advantage of deeper
pockets to fund expensive network investments. The carriers will
need billions of dollars to compete in crucial upcoming government
spectrum auctions that will help determine their ability to grow
for years to come.
In France, Iliad's decision to abandon T-Mobile's pursuit could
spark a new round of domestic consolidation talks.
Together with Iliad, former monopoly Orange SA, Bouygues Telecom
SA and Vivendi SA's SFR, are caught in a price war that is eating
into their profit margins and their capacity to roll out new,
modern equipment.
The four companies--Vivendi is in the process of selling SFR to
Altice SA--have been exploring various ways to combine their
operations and reduce the number of mobile-phone operators down to
three. Iliad has in the past made an offer to buy Bouygues Telecom
but the two parties failed to agree on price, according to people
familiar with the matter.
David Gauthier-Villars contributed to this article.
Write to Ruth Bender at Ruth.Bender@wsj.com and Thomas Gryta at
thomas.gryta@wsj.com
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