So who’s the company that might steal T-Mobile away from Sprint? It’s called Iliad and its pursuit of the U.S.’s fourth-largest wireless operator might prove just as epic as Homer’s classic.
From boasting a CEO who used to run a sex-chat service to shaking up the Gallic mobile market the way T-Mobile’s has gone big and bold in America, Iliad is a name you should know.
That’s because, on Thursday, news broke that France-based Iliad has made a $15 billion cash bid for 57 percent control of Deutsche Telekom-owned T-Mobile. That’s significant because SoftBank-owned Sprint is expected to try to buy T-Mobile for $32 billion – and face intense regulatory scrutiny. And the news is significant because it seems there’s a good chance Iliad could get its way.
But first things first. Who is Iliad? It’s a landline and wireless provider that is giving the incumbents in France a run for their money, just as T-Mobile is doing to Verizon and AT&T, and even Sprint, its potential new owner.
Iliad goes by the consumer name “Free” (or, should we say, “Libre?”) and is France’s fourth-largest mobile carrier – just as T-Mobile is the fourth-largest in the United States. It also offers some impressive deals. For example, its €20 plan, which equals about $27, provides unlimited calling, texting and 20GB of data. T-Mobile charges about $80 for a similar setup.
Iliad is led by Xavier Niel, who’s described as a self-made billionaire, largely thanks to his start with a sex-chat service on Minitel. Minitel was a precursor to the World Wide Web in France and offered everything from online banking and travel reservations to porn; it finally bit the dust in 2012.
Over the years, Niel made a name for himself – in addition to Minitel, of course – by pioneering triple-play packages. (Bloomberg Businessweek also recalls Niel’s jail time – he was arrested when a chain of sex shops in which he had invested was investigated for prostitution. Niel was not charged and, as Businessweek noted, later joked that being behind bars let him catch up on sleep.) Niel now is in charge of a company known for disrupting its peers and he wants to add T-Mobile to that activity.
And even though Deutsche Telekom reportedly has rebuffed Iliad’s $15 billion offer, it may have to reconsider.
U.S. regulators may insist.
You see, there’s a lot of concern about Sprint, the nation’s third-largest wireless operator, buying No. 4 T-Mobile, since that would leave only three major wireless competitors in the United States.
Iliad’s presence, on the other hand, would not result in consolidation.
Now, Niel risks confrontation with Masayoshi Son, the head of SoftBank, and even Charlie Ergen, the billionaire chairman of DISH. Ergen has said he’d think about buying T-Mobile if SoftBank fails.
Still, there are no guarantees.
“It’s a bit of a crazy move,” Borja Mijangos, a telecommunications analyst at Interdin Bolsa in Madrid, told Businessweek. “SoftBank should have an edge over Iliad because they already have experience in the U.S.”
Of course, if industry experience dictated success, it’s a good bet Niel wouldn’t have made the waves he has.
The same goes for Niel’s T-Mobile counterpart, John Legere. Both CEOs emerged from other, less prominent roles to create disruptive companies. They seem to share an addiction for risk not necessarily based on experience – and certainly not based on incumbents’ expectations. With that in mind, regulators in the United States might push for an Iliad-T-Mobile pairing, and the successful enmeshment of the companies’ corporate cultures appear to be a foregone conclusion.
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