Quick Take: Iliad's $15B Offer for T-Mobile

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July 31 (Bloomberg) -- Jefferies' Michael McCormack comments on Iliad SA, the French mobile-phone carrier founded by billionaire Xavier Niel, offering $15 billion in cash for a controlling stake in T-Mobile US. He speaks with Cory Johnson on "Taking Stock." (Source: Bloomberg)

Accelerators -- for more on what those accelerators might be, michael maccormack is here.

Michael, do they need accelerants?

Do they need capital to build up this network?

A lot of people question why not organically.

They have been doing a great job on taking share.

Sprint has been a donor for the entire industry.

From a cash perspective, they are sort of hampered right now given some of the plans out there.

The spectrum auction is coming up.

They are looking for different ways to bulk up.

Specifically, were you shocked by this iliad operative?

Does it make any sense to you that guffey might swallow this whale?

Definitely came out of left field.

There are multiple discussions in the marketplace, sprint being top of the list.

There are a number of things, potentially carlos slim coming in.

Dish, with charlie rubin coming in with a spectrum position to help them become a bigger player in the marketplace.

This was clearly out of left field.

There is a notion here that deutsche telekom might want to unload some of their shares, because any sort of sprint deal would require a lengthy regulatory process and maybe iliad would help them lighten their load a little bit right here.

Clearly t-mobile in the past has been a troubled carrier, and they have really turned things around.

It might be that there is more of a comfort level from the twinge telecom side saying, this is an interesting business, and we are willing to take more equity on a combined basis.

A lot of that pressure has been alleviated recently.

When i was a short seller, one of my colleagues refuse to ever meet the ceo of a coveney lest he be charmed.

I will admit to being charmed by the t-mobile ceo, john leger.

I wonder -- you talk to wall street investors all the time.

Guy traipsing around in a t-shirt -- how is that playing out in wall street?

It is certainly a change from traditional telecom executives we have known.

Tweeting and wearing magenta t-shirts and things like this.

It is definitely a different look.

It is resonating with customers.

He has done a lot of things to shake up the industry.

You see at&t and verizon and probably soon spreads reacting aggressively to the price moves he has made.

It has frankly lowered the price of the industry.

It is shaking things up quite a bit.

What is the single biggest change?

Unfortunately, he has proved there is price elasticity in u.s. wireless.

Could hurt the profits.

Sure, and it is a scale business.

You need spectrum, network utilization, network assets.

These require cash flow.

To the extent that you continue to have somebody chipping away the price points, the return on capital as an industry is worse than it was just a year ago.

These guys have.

-- got a lot of bond payments to make.

If you are looking at a subscale businesslike t-mobile, sprint, to the extent they get that monthly revenue, it will drop straight to cash flow.

For them it is a game they can play for a certain period of time.

Once they scale up and you start bumping up against spectrum needs, more network spending needs, that is where these low price points could become more of a problem for them.

I spent some time with legere and the rest of his team.

Macklemore, the rapper, was there.

These guys got together long before they came into -- the whole global crossing team got together, looked at t-mobile, thought -- what if we did this?

What kind of sense could we create?

How far along do we think they are in their secret, long-term plan for t-mobile?

They have introduced the idea -- a 7.0 is coming very shortly.

There have been a lot of changes.

When we walked in there, it was a sleepy brand.

That has all changed.

To the extent that they are offering unlimited services, international services, etf payoffs -- all of these are resonating very well with the consumer.

Shaking things up has a huge impact on subscribers for

This text has been automatically generated. It may not be 100% accurate.


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