It's the battle of the mavericks.
The Wall Street Journal reported this morning that French ISP Iliad, which goes by the consumer name Free, made a bid last week to buy U.S. wireless carrier T-Mobile.
Iliad's bid will now compete with Japanese carrier Softbank's $32 billion attempt to merge Sprint and T-Mobile. According to the company, Iliad is offering $15 billion up front to buy 56.5 percent of the company: $13 billion financed through debt and $2 billion in equity. Existing T-Mobile shareholders would then see a $10 billion rise in the value of the remaining shares through synergy, Iliad says.
Since Iliad isn't matching Softbank's cash price, regulators are the key variable here. While Softbank and Iliad have reputations in their home countries for shaking up their markets and dramatically bringing down prices, Iliad's bid doesn't involve reducing the number of U.S. wireless carriers. The possibility of dropping from four to three national carriers drives consumer advocates like me, and more importantly the FCC, a little nuts.
T-Mobile's U.S. operation, meanwhile, has seen spectacular success under relatively new CEO John Legere, whose "UnCarrier" moves have led to a dramatic uptick in customers - 1.5 million more this quarter, according to results released today.
So what is Iliad and do we want it to own the UnCarrier?
Free, To Do What I Want, Any Old Time
Within France, Iliad is known mostly as Free. It runs a landline ISP and a wireless carrier, both of which are very successful. When we tested France's ISPs, we found that Free was by far the fastest ISP in the country.
"Free has also put a lot of pressure on the big conglomerates like Orange to lower the prices and benefit consumers," Jerome Tranie, a long-time French mobile blogger, wrote in our story.
Iliad and Softbank actually have a lot in common: they're both led by their founders, loudmouthed tech-business geniuses who shocked their local ISP markets with radical price reductions and consumer-friendly business policies.
Iliad's majority owner, Xavier Niel, started out offering sex-chat lines through France's pre-Internet Minitel service, according to Wikipedia. (I found romance on Minitel myself, long ago.) He owns the tune rights to the song "My Way," is a huge supporter of the press, and wants to offer "the newest and best technologies accessible to the greatest number at the lowest cost," according to a recent Wired profile of him.
Free Mobile was France's fourth wireless carrier, and today it offers some amazing deals. Its €20 plan offers unlimited calling, texting, and 20GB of data. T-Mobile U.S. currently charges $80 per month for a similar plan.
Free also has another thing in common with T-Mobile: limited coverage. According to our technology partner Sensorly, Free's native 3G coverage in France is less comprehensive than competitors Orange and SFR. French regulators are looking into Free's 3G coverage rollout.
Wall Street analysts seem skeptical of the Iliad bid. Fierce Wireless quotes two, Walter Piecyk and Jonathan Chaplin, who suggest Iliad is simply biting off more than it can chew. (Piecyk is a frequent Twitter sparrer of mine, and he's come out strongly behind the Sprint/T-Mobile combination.)
But the Softbank bid will be raked over the coals by the FCC, the Department of Justice, and loudmouths like myself who don't want to see this nation of 320 million people reduced to three wireless choices. DT has already watched the AT&T bid fail. Iliad's offer, on the other hand, is likely to skate smoothly through the regulatory process.
Analyst Chaplin throws another element into the mix, though, saying in the Fierce article that "we do think there are other credible potential bidders out there for TMUS." So T-Mobile's fate may get more complex before it gets simpler. Hopefully, Legere's team will be able to stay the course and not get too distracted as it does.