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French telecom Iliad days ago made an offer to buy T-Mobile, an effort to get in the way of a Sprint-T-Mobile merger that neither U.S. carrier will admit is being negotiated.
The Wall Street Journal reported the offer July 31, citing people familiar with the matter and who said that Iliad views the deal as a “one-time opportunity” to enter the U.S. wireless market.
It’s rumored that Sprint majority shareholder Softbank could pay $39 billion for T-Mobile. It’s unknown how much Iliad’s bid is; according to the report, the carrier is working with several banks to secure financing.
Iliad is a feisty, young carrier that has “sparked a fierce price war” in the French telecom market, according to the Journal. In March, Sprint Chairman Masayoshi Son told interviewer Charlie Rose that he, too—if allowed to buy T-Mobile and so take on AT&T and Verizon with a carrier of equal size—would wage a “massive price war.”
That hasn’t been T-Mobile’s style, however.
Since dubbing itself the “Un-carrier,” T-Mobile has questioned every established industry convention and then offered an alternative. It’s the latter that has brought about the carrier’s turnaround, CEO John Legere said during a July 31 earnings call.
“These are not huge discount programs. These are profitable programs that … we can sustain,” said Legere.
He also said T-Mobile has taught consumers to read into ugly business strategies and has shown them what the alternative can be. Over the last five quarters, the carrier did away with two-year contracts on subsidized devices, offered monthly financing plans, made it possible to upgrade more frequently, put an end to data roaming rates in most countries and put policies in place that have helped people get over their fears of buying cellular-enabled tablets, among other practices.
“I don’t think anyone’s fooled anymore,” said Legere, regarding how consumers view T-Mobile’s competitors.
They’re also not fooled about whether negotiations between T-Mobile and Sprint are underway, though Legere artfully evaded direct questions during the call, teasing analysts that there was a need for “a guide” to teach analysts what “reported” means.
“We have never commented on this or any other deal,” Legere finally said in regard to questions about Sprint. He added, “It’s a scale game. … We see a path to be successful as a stand-alone company … but we could also significantly accelerate that growth [through a merger].”
T-Mobile announced second-quarter revenue growth of 8 percent year over year and service revenue growth of 7.1 percent. During the quarter, it added 1.5 million customers, 579,000 of which were branded postpaid. It was T-Mobile’s fifth consecutive quarter of 1 million-plus subscriber gains.
Sprint, the day before, announced second-quarter results that included a loss of 220,000 customers (an improvement over the 383,000 the quarter before) and income of $23 million, also an improvement over the $151 million loss it posted the quarter before.