Xavier Niel’s Iliad Said to Face Hurdles in T-Mobile Bid

Iliad SA faces hurdles in its plan to buy T-Mobile US Inc. as a search for extra financing lingers on and Deutsche Telekom AG reconsiders plans for its U.S. unit, according to people familiar with the matter.

Talks between Paris-based Iliad and potential partners, including buyout firm KKR & Co., have yet to result in a higher bid, the people said, asking not to be named discussing private deliberations. At the same time, Deutsche Telekom board members are split over whether the German carrier should sell its only growing asset, said two of the people.

Iliad, controlled by billionaire Xavier Niel, has discussed raising as much as $5 billion in additional debt and equity for a sweetened offer, said one of the people. Senior executives held talks in the U.S. with potential investors this month, people familiar with the matter said.

Deutsche Telekom last month rejected Iliad’s $15 billion cash bid -- or $33 a share -- for a controlling stake in Bellevue, Washington-based T-Mobile. The Bonn-based company was willing to negotiate a sale if an offer comes in the range of $35 to $40 a share, people familiar with the matter have said.

T-Mobile hasn’t heard from Iliad about an improved offer and did not consider its first proposal to be serious, according to two people familiar with the matter.

T-Mobile’s turnaround from a customer-losing business to one that rivals AT&T Inc. and Verizon Communications Inc. in growth has attracted suitors from Japan to France. Japanese billionaire Masayoshi Son’s Sprint Corp. walked away from talks in August because of disagreements over terms and concerns that a deal to combine the third- and fourth-largest U.S. wireless carriers would be rejected by antitrust regulators.

Spectrum Auction

Whoever owns T-Mobile would face the cost of upcoming spectrum auctions and network improvements that larger rivals can more readily finance. Deutsche Telekom may wait until after the Nov. 13 frequency auction before committing to a strategic decision on T-Mobile, the people said.

The unit has also attracted interest from Dish Network Corp., whose co-founder Charlie Ergen recently contacted Deutsche Telekom, the people said this month.

Representatives for Iliad, Deutsche Telekom and T-Mobile declined to comment. A spokesman for New York-based KKR also declined to comment.