Last month's bid for T-Mobile by the French provider Iliad and its billionaire owner Xavier Niel surprised just about everyone. But after the initial shock wore off, nobody took it too seriously. Yet by now we should know that when one of the industry's icons gets started on the hunt, the first shot is just the beginning.
News this morning has Iliad looking for some help to make its bid more palatable to Deutsche Telekom, which has suggested $35-40B is the price at which they'll talk about a deal. Supposedly, Iliad is talking with private equity firms and other deep pockets, looking to raise some additional funding for a deal.
But to keep the interest of the money guys, Iliad is going to have to convince them that the proposed $10B in mystery synergies (or more to justify a higher price) have some basis in reality. I look forward to hearing how all of that might happen, surely a few details will trickle out from the talks.
Iliad apparently also believes it can boost profit margins at T-Mobile from 20% to 30% all while continuing to hit aggressively on pricing to build marketshare. Niel did the same thing in France successfully, but it's still rather hard to imagine what else he'd be doing in the US that T-Mobile isn't already trying.
I do wonder if the natural partner for Iliad isn't simply Dish and that other billionaire that has been chasing a US mobile entry point, Charlie Ergen. That would be a partner they'd have an easier time convincing of the overall mission, since Dish has already gone after Sprint and Clearwire in the past and has looked at T-Mobile more than once. The spectrum Dish could bring to the table wouldn't hurt either of course. However, perhaps it would put too many cooks in the kitchen to have Niel and Ergen team up?