Iliad said it would finance the cash offer with a combination of debt and internal resources and has secured the support of international banks for the loans. Around EUR 2 billion would come from a capital increase at the French company, in which controlling shareholder Xavier Niel has pledged his participation. Iliad said it does not expect any regulatory problems with the acquisition, given it currently has no presence in the US.
Iliad’s offer comes as Deutsche Telekom was thought to be close to an agreement to sell its controlling stake in T-Mobile to Sprint, merging America’s third and fourth largest mobile operators. Softbank, the parent company of Sprint since last year, has been keen to consolidate the market in order to step up competition with the leading operators Verizon and AT&T.
According to media reports, Deutsche Telekom is concerned about possible regulatory opposition to the deal and had been seeking a high break-up fee in case the deal was vetoed by competition authorities. Its earlier attempt to sell T-Mobile to AT&T was blocked in 2011 due to competition concerns. The company used the break-up fee and spectrum received from AT&T to help turnaround the T-Mobile business and acquire the smaller operator MetroPCS last year.