T-Mobile stocks have shot up by 9.1 percent after it was revealed that French company, Iliad, was interested in a buyout. The French company made its offer to the T-Mobile board, but we're not so sure if they are willing to bite.
According to reports, Iliad is willing to pay $16 billion for T-Mobile, and while the price seems to be quite low, Iliad has no one to compete with right now. We know that Sprint made a bid for T-Mobile, however, it is becoming increasingly apparent that U.S. regulators might block the deal, leaving only Iliad to parlay with T-Mobile.
In the light of Iliad's proposed [subscription required] offer for T-Mobile, Sprint's shares fell by as much as 6.3 percent on Thursday.
Interestingly enough, we've come to understand that Iliad is much smaller than T-Mobile. The French telecom company has just around 8.6 million wireless subscribers, and 5.7 million broadband subscribers. That number pales in comparison to T-Mobile's 50.5 million subscribers in the United States.
According to Iliad, its deal for T-Mobile will not raise the same anti-trust issue as Sprint's proposal. However, because Iliad is a much smaller company, there's a high chance T-Mobile might not see the reason behind going along with this deal since it doesn't add any U.S. subscribers to its network to help it compete better with the likes of Verizon and AT&T.
A Sprint deal would have been a better bet, but the Iliad deal might be below what T-Mobile wants. If the Iliad deal turns out to better where terms are concerned, then it could complicate situations, and move T-Mobile closer to the French and away from Sprint.
Europe to rescue U.S. mobile subscribers?
As high prices and poor competition continues to rock the U.S. carrier market, European companies have been looking on ways to enter. It is long known that European mobile market is more competitive and cheaper for consumers, so if more European companies enter the United States, it could be damning for AT&T and Verizon as these companies would likely compete on price.
As it stands, the shrewd business practices by U.S. telecoms could be their downfall, as it opens the door for competition from across the seas.