T-Mobile US Inc (TMUS) Shares Several Characteristics With Iliad But A Deal Has Slim Chances

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On CNBC, Wassil El Hebil, an analyst at Berenberg, discussed the recently announced bid for T-Mobile US Inc (NYSE:TMUS) from the French telecom firm Iliad. He provided his opinion about how he sees the deal and its chances of going through.

Iliad stepped forward with an offer of $15 billion for T-Mobile US Inc (NYSE:TMUS), which values the U.S. fourth telecom operator at about $33 per share. The surprise offer came at a time when T-Mobile and rival Sprint Corporation (NYSE:S) are said to be negotiating about joining forces, yet regulatory issues also pose a serious headache to their combination.

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 “[…] they have decided to make this kind of a counter bid at $33 a share, which seems a little bit low, but quite a smart move because here basically their stronger card is regulation. They know perfectly that the antitrust risk is much lower with Iliad than Sprint,” said El Hebil.

Shares of Iliad fell on Friday, apparently as investors looked at the bid and felt it was too big for Iliad to carry. However, Hebil considers that the value of the deal could go even higher and reach $36 or $37 per share.

According El Hebil, the bid is a smart move, and while he thinks it stands a small chance for success, it is possible that Iliad could raise its offer for T-Mobile US Inc (NYSE:TMUS). Also, he said that on antitrust grounds, Iliad stands better chances to succeed in acquiring T-Mobile than Sprint. Furthermore, he also said the two telecom companies have a lot in common.

“They have the same kind of profile – high profile management, John J. Legere on one side, and Xavier Niel on the other side, and the same kind of pricing strategy—try to disturb the market to gain market share,” said El Hebil.

As to whether a deal is possible between T-Mobile US Inc (NYSE:TMUS) and Iliad, El Hebil said chances for a deal are slim. However, he noted that Iliad appears to have been promoted to make a bid for T-Mobile out of the realization that Sprint Corporation (NYSE:S) had failed to announce a deal in spite a lot of talks bordering on the same.

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