Illiad to Boost Bid for T-Mobile US
France’s Illiad says it plans to boost the value of its bid for T-Mobile US, as observers expect a bid from Dish Network late in 2014 or early in 2015, and some expecting a possibly wider range of suitors.
Illiad initially submitted an offer to buy about 57 percent of T-Mobile US for $33 a share, not the whole company, a bid that Deutsche Telekom quickly dismissed as insufficient to create serious interest.
Illiad now says it will consider purchasing a bigger stake. Deutsche Telekom, meanwhile, has said it would sell at $35 a share.
But some think Dish Network would be willing to pay as much as $40 a share.
Oppenheimer equity analyst Timothy Horan argues that could be the case since Dish Network has to build out its network or forfeit rights to use spectrum assets valued at about $28 billion.
Dish Network is a motivated buyer: it stands to lose $28 billion in assets if it fails to begin construction on its network relatively soon, as ownership of T-Mobile US would give Dish the ability to do so.
There are other strategic issues as well. Dish Network believes its core linear TV business will be challenged over time, as video entertainment distribution shifts to over the top mechanisms.
Dish Network essentially is a single-play provider in a business that has become a triple-play business. So Dish needs some way to become both a triple-play provider and a service provider that can support over the top video delivery.
Horan speculates that Comcast Corporation or America Movil potentially could emerge as bidders.
Since regulators and antitrust officials have made clear a desire to maintain a four-provider structure of the U.S. mobile market, we should expect a minimum of four leading national providers in the near term: Verizon Wireless, AT&T Mobility, Sprint and T-Mobile US (owned by perhaps Dish Network, Illiad, or some other firm). In the medium term, Comcast will join that list.