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French Provider Free Could Buy US Branch of T-Mobile
Guybrush_T (980074) writes Iliad, the parent company of Free, confirmed today having made an offer to buy 56% of the U.S. branch of T-Mobile. This could be very good news for the U.S., since the provider reduced significantly the average price of mobile plans in France since they entered the mobile market two years ago. Their disruptive strategy, featuring an all-inclusive €20/month plan and a €2/month plan gathered 11% of the French market in only two years and lowered the price of plans by a factor of 5 to 10.
Voulez vous ales au Canada apres s'il vous plait
Do you mean the US shareholders of T-Mobile? The CEOs? The Execs?
You couldn't possibly mean good for the US consumer... or did you? It's a bit awkward this. You must excuse me, you see we in the US have never really had any experience with that sort of thing - a company doing something that's good for the consumer... wow, I wonder how that feels like. Is that like when a Comcast sales rep signs you up for a promotion that actually costs you money in the long run, but gives you a refund when you spend hours on the phone, in effect being all nice and not ripping you off?
According to TmoNews, this was rejected.
http://www.tmonews.com/2014/07/french-telecoms-company-iliad-makes-bid-for-t-mobile-us/
If true, please buy something in Canada.
Yes, it's consumers. Because it's a French company, if you have to dispute an over charge, they just surrender and back it off.
As a French, I'm not sure that I like that idea, Free spending lots of money to buy marketshare in the US instead of enhancing their network in France.
AOL tried to do the inverse a while ago. They bragged that they were leaders in 'America', about to obliterate French providers. It ended awfully for them.
Free (and SFR, others) killed them.
The sooner the better. It couldn't possibly get worse.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
Please everyone just leave T-Mobile alone. They are doing great the last few years. I don't want them ruined by Sprint or Iliad or Dish or anyone else!
Competition is good and T-Mobile is proof of it. Even if you don't use T-Mobile and never will, you have STILL BENEFITED from many of the things they have done lately which have been forcing other carriers to make changes.
Just today:
"T-Mobile posted its second quarter earnings today, and the carrier is continuing momentum as far as customer acquisition is concerned. The Uncarrier managed to add an additional 1.5 million customers in the second quarter, which makes it the fifth consecutive quarter in which the carrier added more than 1 million subscribers. The influx of new customers meant that T-Mobile's revenue rose by 15.4 percent to $7.2 billion. 50 million total subscribers now."
Would someone please explain WTF this means?
If a monthly rate of 10 zorkmids is reduced by 5 to 10 times, then the company would be paying you 40 to 90 zorkmids per month.
I can see why people might be enthusiastic about that, but I doubt that that is what actually happens.
It means the combined entity will be saddled with debt that will be financed, in part, by higher prices and/or diminished services. A bad deal except for top management, including those of the acquired company who generally depart via golden parachutes.
The French are coming, The French are coming...
+1 LIKE
U.S. companies are worth more to foreign companies than to other U.S. companies because foreign companies pay lower income taxes. A U.S. company, Emerson, lost a bid to a French company, Schneider, for APC for that reason. As the WSJ states (free access to the paywalled article via FaceBook):
Ceci n'est pas une signature.
The US market is pretty much dominated by oligopolies. I don't think with laws, markets, and consumers who are backwards there will be much innovation.
I've worked in telecom, for T-Mobile and it's just ingrained in the system.
The fact that costs decrease as newer "next gen" networks are implemented but prices do not go down accordingly is a mockery of our intelligence. Marketing, ftw?
You can literally find white papers from sony ericcson, Nokia, etc documenting it as a selling point for upgrading the network.
When the GSM networks were "edge" it costed with taxes, drawing a profit, around $8 per user, per month. Text messages are essentially free for the carrier (due to how they work on the network). With more or less VOIP calls, calls to are getting there (free).
Don't get me wrong, I'd love competition. America just hates it.
Xavier Niel, founder of Free/Iliad, is the absolute best thing that could happen to America's telecom services. He has completely shaken up the stodgy French telecom market. The value prop for telecom is so much better than several years ago. If you like Elon Musk and Steve Jobs, you'll love Xavier Niel. He thinks out of the box.
Xavier Niel even showed up at a Paris Hackathon to check out what was going on. I thought that was tres cool. He's experimenting with new approaches to learning computer science in schools and is opening up Europe's biggest tech incubator. He doesn't just talk-the-talk, he makes it happen.
T-mobile is already quite cheap if you use their SIM and bring your own phone.
..buying T-Mobile.
Because I think the United States system is stagnant, lacks competition, and bilks consumers for everything.
We are paying 8x too much for wireless service and internet service today. Example: In the days of dialup, competition between ISPs set the rate at $9.95 for unlimited service, while some so called "premium services" cost between $17.95 and $19.99/mo, for the likes of AOL & AT&T WorldNet). Since competition ended thanks to broadband monopolies giving you 1 or 2 choices for service, prices skyrocketed to $40 then $60 and so on. They even have plans that cost $300 now.
But the service underneath those prices is exactly the same.
If Free enters the market with purchasing controlling stake in T-Mobile, and applies the business model they deploy, we could be talking about wireless service being sold at cost again, which is in the range of $5 bucks and maybe $20 - $30 bucks tops for completely unlimited service w/o caps. Free's current pricing model cost $26.76 US Dollar for 3GB data with unlimited voice and text. However T-Mobile charges $60 for that, and competitors charge closer to $80 under contract. Switch to Prepaid and that level of service cost $45 with Straight Talk.
Technically we should do away with caps as they equate to simply a way for the company to try to bilk customers more by extra charging for use when they already make a mint off the service they get paid for.
International carriers have already said that the spectrum allocation in the US makes turning T-Mobile into a good efficient high quality low cost carrier like the rest of the world is impossible. Also this French group doesn't have the cash to buy T-Mobile and there's no indication they can leverage T-Mobile even more than it is now to buy it. No, I'm sorry but Obama's FCC will get their wish which is to let T-Mobile die so Verizon and AT&T can pick up their customers for almost no cost. Sprint's going out of the retail branded business in a year or two so that will leave 2 carriers in the US to jack prices to the sky and make service even worse.
French here. Iliad's strategy might be good in the short term for consumers, but in the long run, this might just have catastrophic consequences. Let me explain.
They have the same strategy as Easyjet when they entered the air travel market - low prices and agressive marketing. Indeed, people sometimes didn't need all the "options" other airlines made them get, like assigned seats, meals. It makes sense on short trips : Nice-Geneva is a 45 minute flight, and you sure don't need food, beverages, or a specific seat on the plane for short-haul flights.
This worked well, too - many local airlines crashed and burn when they couldn't compete with their prices. The perverse effect, now, is that Easyjet is the only option for many routes, and they hiked up the prices when they didn't have anybody left as concurrence.
The telecom market in France is currently tanking - you need a license to operate on GSM airwaves. The government opened up for a fourth carrier, Free took the shot and announced their aggressive pricing. The others had to follow suit, and that was before deploying 4G, a huge infrastructure cost for carriers. They signed a roaming deal with Orange in order to provide service everywhere, but terms were not really well set, and Orange's network was sometimes overloaded by Free's subscribers.
Now all the carriers in France offer the same deal as Free. Sure, the customer is happy with that, but carriers now have less and less cash to improve infrastructure, and it has desastrous effect on quality of service. Recently SFR, once the second biggest carrier, got sold to a Dutch company. Bouygues Telecom, the third biggest carrier, is for sale. Free is breathing in their neck, offering to buy it for less than what it's worth. Orange offered to buy them but withdrew their offer.
SFR's network is dwindling fast, Bouygues no longer has the economic power to improve, Orange is still afloat because it's the spin-off of France Telecom, the old public phone company, and Free is still there, working on their network at the slowest pace ever because they don't have the cash to build up,
Everyone is slowly crashing. As soon as Bouygues is out of the picture and SFR will no longer be competitive, Free will be able to hike the prices, just like they did on their ADSL offer.
Low prices is not always good for the customer.
Before launching their mobile telephony offering and forcing the previous oligopoly to slash their prices, Free did the same with ADSL Internet (and ISTR with dialup before that). I pay something like USD 45/month for:
- uncapped broadband with static IP and valid rDNS (living in an area well covered by DSL that is about 17 Mbps down, but if/when their fiber gets here I'll pay the same price for 1 Gbps!)
- plus unlimited telephone to fixed and mobiles in France, to fixed in some 100 other countries and to mobile in some countries, relatively low rates otherwise
- a SIM card with unlimited SMS, 50Gb 3G/4G data/month, 2 hours phone (the unlimited version would set me back some USD 22/month more) and extremely competitive rates for anything not included
- Some 600 television channels (some of which you have to pay extra for, sure), with timeshifting, pay-per-view video on demand, and free replay (usually the last week of popular series, depending on the channel)
- an ADSL box "Freebox", extremely well thought out (hello Rani) with a really excellent user interface (web browser, games, what have you), a 4-port gigabit switch, a Blu-Ray reader, a 250 GB disk that can be used as a NAS and for recording television programs
- lots of techie goodies (IPv6 if I want it, messages left on my answering machine can be forwarded to an e-mail address, I can force certain MACs to an IP so that I have the same IP whether connected by WiFi or Ethernet, and, and, and, isn't there a length limit on comments here?)
I'm looking at moving to the US (like SF or NY, https://www.linkedin.com/pub/l... ), so I read the Comcast horror stories with interest. In comparison, I have called Free tech support once in six years, after a storm killed my Freebox. It was replaced (without charge I believe), and nobody even hinted that I might like to buy anything more. If they manage to buy a US provider, no question, I'll be their client.
Well anything is better than AT&T Wireless, that's for sure.
"subject to a tax rate of nearly 40%, with a credit for taxes paid abroad on that income". Depending on where that income is earned, the foreign tax rate may eliminate the US tax; As evidenced by several of our largest US HQ'd corporations paying 0% taxes. As for your insinuation that a foreign company owning T-Mobile would pay less taxes... that simply isn't true because T-Mobile would still pay US taxes for US earned income. The only reason WSJ had an argument about Emerson v. Schneider is because APC "made more than half of its earnings outside the U.S.". I think it's also worth mentioning that T-Mobile is a German company so their tax liability is not clear cut.
Another French here. I don't think the higher prices that we paid before Free appeared were so good for investments. On the contrary: since Free appeared, Orange and the 2 other providers pushed and marketed heavily the "4G" (LTE), that Free does not offer. They had to compete on quality because they could not cope with the price. In 2005 (Free was not a mobile provider yet) they were together sentenced to 535 million euros due to an unlawful agreement. The market forces did not apply anymore, a big problem on the long term. We did not destroy the France Telecom monopoly in order to have a private oligopoly. Private firms will not invest on hardware if they can avoid it. Either they do it to provide better product or service (and the price will be higher), or they are forced by law.
Christophe (Don't hesitate to point out my spelling and grammar mistakes, I want to learn - Thanks).