France’s Iliad makes a surprise bid for T-Mobile. Would it be a better fit?

No one saw this coming. France’s Iliad is making a $15 billion bid for T-Mobile US(s tmus), presenting a major threat to Sprint and Softbank’s plan to acquire T-Mobile(s s), which was thought to be only a press release away from becoming official.

Iliad is a broadband ISP but it also runs Free Mobile, a new mobile carrier shaking up the French mobile market. Free has been using Iliad’s extensive network of residential broadband Wi-Fi and new wireless technologies to undercut France’s three big incumbents. The ensuing price war has seen millions of customers migrate to Free Mobile’s subscriber rolls.

“The US mobile market is large and attractive. T-Mobile US has successfully established a disruptive position, which in many ways, is similar to the one Iliad has built in France,” Iliad officials said in a statement.

Source: Flickr / swruler9284
Source: Flickr / swruler9284

Iliad has offered $15 billion in cash for 56.6 percent of T-Mobile US, which values its shares at $33 apiece. Iliad said the deal would value the remaining 43.4 percent of the company at $40.50per share due to “$10 billion of synergies,” leading to an overall value of $36.20 per share. That would value T-Mobile at $29 billion. Meanwhile, the bid Sprint and SoftBank are rumored to be preparing would value T-Mo at $31 billion.

Iliad’s upstart mentality actually makes it a much more natural fit for T-Mobile. T-Mobile could easily continue its “Uncarrier” onslaught on the other U.S. operators, and even take some of its cues from Free Mobile. But such a deal would bring no operational advantages to the U.S. carrier, while a merged Sprint-T-Mobile would be instantly propelled to the top ranks of global carriers with more 100 million subscribers.

On the flip side, a T-Mo-Sprint combo would also kick off a long, grueling operational integration process as they swapped out networks and tried to integrate their separate customer bases. Sprint is a CDMA carrier and T-Mobile is a GSM carrier, and if history has proven anything, it’s that these kind of mobile mega-mergers — especially between carriers with different network technologies — produce far more stagnation than innovation when they’re first executed. Sprint to this day is still recovering from its long-ago acquisition of Nextel.

As the last several quarters have shown, T-Mobile has had no trouble growing on its own. T-Mobile’s future might actually become brighter under a foreign owner than as part of Sprint.

Though both T-Mobile and Free are the fourth largest carriers in their home markets, T-Mobile is actually much larger due to the respective size of their countries. According to the Wall Street Journal, T-Mobile has a market value of $24.8 billion, while Iliad is worth only $16 billion. Iliad, however, said it would finance the deal with a combination of debt and equity and has support of multiple banks.