illiad

Is Deutsche Telekom now desperate? They have now Lowered the price of T-Mobile

September 1, 2014 - Written By Wayne Peterkin

As we all know, the telecommunications  industry is a very intense one and those who can’t survive either go bankrupt like Amp’d mobile, if you can even remember them, or they get swallowed up by the bigger players like what happened with Cingular and the now monstrous AT&T. This has also happened in some very interesting ways as well in which a smaller company has taken over a much larger company as seen in Metro PCS’ and T-Mobile’s very complex reverse merger. The same thing might again transpire if French telecommunications  provider, Illiad, is successful in  their attempt to buy a 56% stake in the much larger American carrier, T-Mobile.

Never say die! It seems that Iliad is hell bent on buying out T-Mobile USA even after a resounding no on their first attempt which was scoffed at because Illiad’s pockets simply weren’t deep enough. Before Sprint decided to back out of the merger with T-Mobile, they were offering $40 per share, Illiad made their bid, as is a common practice it seems, before the deal fell through and offered Deutsche Telekom only $33 per share. Though this amount is far less than Sprint’s offer, it seems that Illiad knew something that many others didn’t since they seemed very confident even though they were offering less than the much bigger company, Sprint.

By offering incredibly competitive options to their customers, the Uncarrier carrier managed to add over 2.4 million subscribers in Q1 of this year. By May of 2014, Tmobile USA managed to post four quarters of consecutive service revenue growth and had larger subscriber growth than AT&T. Well, one would think that Deutsche Telekom would be happy with T-Mobile USA’s progress but apparently that assumption is gravely mistaken as they are still trying to vigorously shake off T-Mobile USA in order to better compete in a very competitive European market.

Deutsche Telekom, who rejected Illiad’s first bid, has now claimed that they would be willing to settle for $35 per share in order to meet Illiad half way. Though this is still more than what Illiad offered to pay last time, it shows that Deutsche Telekom has very little interest in remaining in the U.S. market. Though the price was just lowered, Illiad seems to still have difficulty in coming up with the money and has reportedly been going to different tech giants such as Google, Microsoft, Dish Networks, Cox Communications and Charter Communications to bring in more investors and other sources of income to meet the new and lower amount. New reports have also stated that Illiad has been in discussions with other private equity firms as well.

This could work out to the benefit of T-Mobile’s current and future customers since Illiad’s plans, like Tmobile USA’s, are quite low as well and the strategies that the two companies use to to attack the market appear to coincide with each other. So, hopefully, if this bid does go through, the U.S. Market will continue to witness this excellent level of competition that it had been lacking for so many years.