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TheStreet Open House

Iliad Considers Partners for T-Mobile USA Bid

PARIS ( The Deal) -- French telecommunications company Iliad has not given up its ambition to buy T-Mobile USA (TMUS)  and is considering roping in the support of private equity investors or another other phone company, a senior executive said Monday.

Potential bid partners have contacted Iliad in recent weeks after the Paris-based company offered $15 billion, or $33 per share, for a 56.6% stake, Iliad CFO Thomas Reynaud told a news conference.

A joint bid for T-Mobile is "one of the options" being considered, he said. "The offer we made is still pertinent but it could evolve, not specifically in terms of valuation, but on the percent of the capital [acquired by Iliad]."

The CFO declined to say which companies Iliad had been speaking to, claiming that secrecy was necessary as negotiations were ongoing.

An Iliad source added: "There were a number of industrial players and financial partners who came to talk to us [about T-Mobile] even before we released publicly on this transaction."

Iliad, which operates only in France, surprised the market at the end of July with an unsolicited offer that valued T-mobile's equity at $26.5 billion, more than twice Iliad's own market capitalization of 8.86 billion euros ($11.6 billion).

The French company claims its offer is worth $36.20 per share, including unexplained synergies that would accrue to the 43.4% of shares outside its bid. T-Mobile parent Deutsche Telekom AG rejected the bid on Aug. 7, claiming it was not in T-Mobile shareholders' interests. The Bonn, Germany-based company owns 67% of Bellevue, Wash.-based T-Mobile and is reportedly seeking $35 to $40 per share for its stake in T-Mobile. The U.S. group's shares closed on Friday at $30.08.

The prospect that Iliad will have to make a combined bid to meet Deutsche Telekom's valuation was underlined on Monday when Reynaud said that Iliad won't increase its initial plans to raise a maximum $2 billion of new capital to support its bid. Iliad said Monday that the debt component of its offer "has the support of leading international banks."

Deutsche Telekom has so far refused to give Iliad access to T-Mobile's books, Reynaud said.

Iliad is the only company with a confirmed interest in T-Mobile USA after potential rival Sprint Corp. pulled out of talks to buy the unit because of regulator opposition to consolidation amongst nationwide wireless providers. Sprint had been expected to offer $40 per share for T-Mobile. Dish Network Corp. CEO Charlie Ergen said last month that he might be interested in a bid.

Iliad on Sunday said that first-half Ebitda climbed 7% to 624 million euros, while sales increased 10% to 2 billion euros.

The prospect of a new offer for T-Mobile spooked Iliad investors, who sent the company's shares sharply lower on Monday, to 151.70 euros, down 15.50 euros, or just over 9%, on their Friday close.

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