Well, so much for the theory that T-Mobile can’t survive on its own. For more than a year now, T-Mobile has been in the midst of a remarkable — and chest-thumpingly advertised — turnaround. Now the No. 4 U.S. wireless carrier is getting new validation of its ability to survive on its own: a buyout offer from someone who doesn’t plan to shut it down.
That offer comes from French mobile-phone carrier Iliad SA. At $33 a share for a controlling stake, the offer is lower than the $40 a share bid Sprint is reportedly working on. If T-Mobile’s owner, Deutsche Telekom, is really set on selling, Iliad’s offer does have the major advantage that Iliad doesn’t already own a competing U.S. wireless carrier.
That trumps Sprint’s offer, because pretty much the only way for Sprint to justify buying T-Mobile to the Federal Communications Commission is to argue that T-Mobile can’t make it on its own. The fact that Iliad is willing to bid $15 billion for 56.6 percent of T-Mobile is prima facie evidence that at least someone with knowledge of the telecom industry thinks that’s not true. Having already turned down one T-Mobile merger, that alone seems like plenty of reason for the FCC to turn down another.
Notably, Sprint has not made a formal offer for T-Mobile in the four months since it was widely reported to be working on one. That’s a head-scratching approach, unless your plan is to maximize the chance of bringing other suitors out of the woodwork. Now there seem to be two offers for T-Mobile: the lowball one from Iliad that Deutsche Telekom doesn’t want, and a long-discussed one from Sprint that regulators are likely to turn down if it ever materializes.
At this point it’s worth asking if anybody genuinely wants to buy T-Mobile. Or is talking about buying T-Mobile is mainly a way for Sprint and Iliad to signal to the markets that they are deep-pocketed players who plan to grow? If it’s the second, great. There are still plenty of ways to grow in telecom that don’t involve buying up the competition.