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T-Mobile U.S.: Attractive Get for Telecom, Big Tech

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T-Mobile U.S. Inc. (TMUS - Free Report) remains hot in the ongoing consolidation trend within the U.S. telecom industry. Since 2011, T-Mobile U.S.’s parent company, Deutsche Telekom, has been exploring several options to divest its U.S. operations. Recently, the New York Post reported that French broadband service provider, Iliad SA, is considering renewed bid for T-Mobile U.S.

Earlier this month, Iliad offered $15 billion for a 56.6% stake in the nation’s fourth largest telecom operator. However, T-Mobile U.S.’s management immediately rejected the offer on ground of inadequacy. Meanwhile, the New York Post revealed that Iliad is pursuing tech giants Google Inc. and Microsoft Corp. (MSFT - Free Report) to help it to bid for the second time for T-Mobile U.S.

Both Google and Microsoft primarily function as software developers. However, in recent times, both of these companies have given clear signals of opting for operational diversification. In keeping with this, Google acquired the smartphone business of Motorola Mobility, which was later sold to Lenovo and Microsoft took over Nokia’s smartphone division.

Nevertheless, a direct involvement in the telecom, especially in the wireless business is altogether a different ball game. It is still not clear whether either Google or Microsoft will become a partner of Iliad for its renewed bid for T-Mobile U.S.

Way back in 2011, AT&T Inc. (T - Free Report) placed the first bid for T-Mobile U.S. After a close scrutiny, the Federal Communications Commission (FCC) thwarted AT&T’s attempt to acquire T-Mobile U.S., stating that it seeks a minimum four national carriers in order to maintain competitiveness.

In Jul 2014, Sprint Corp. (S) offered $16 billion for a little over 50% stake in T-Mobile U.S. Again the deal was thoroughly evaluated by both the FCC and the U.S. Department of Justice. The regulators decided for the same opinion. Consequently Sprint opted out from the race.  

Meanwhile, satellite TV operator DISH Network Corp. (DISH) has been pursuing the idea to acquire T-Mobile U.S. DISH Network has created an extensive portfolio of spectrum, the most important component of wireless networks. Recently, DISH Network confirmed its intentions of taking over T-Mobile U.S. after Sprint’s bid was stifled down by regulators.

According to industry rumors, cable TV operator Charter Communications Inc., which lost to Comcast Corp. (CMCSA) in its efforts to acquire Time Warner cable Inc., may also submit a proposal for T-Mobile U.S. However, both DISH Network and Charter Communications have yet to come up with a firm bid. T-Mobile U.S. currently has a Zacks Rank of #3 (Hold).

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