How Iliad-Free blew Americans
Targeting T-Mobile, the dream group to export its model of this unusual market. After forming his strike team, Xavier Niel launched the assault. To the amazement of all.
The atmosphere is a bit dull on Monday September 1. Xavier Niel has not come to the show, giving one of his famous shots claw rivals. In the basement of the headquarters of Iliad, in a room plunged into darkness conferences, the placid CEO Maxime Lombardini holding the console, declining to the press the results of the first half. They are good: revenues up 10% to EUR 2 billion profit levels maintained at 140 million debt under control. The discussion leads to the statement of the magic name: T-Mobile. A month earlier, the group released its sights on the American subsidiary of Deutsche Telekom, officially on sale.
Closely involved in discussions summer, Thomas Reynaud, the Deputy Director General, applies to recount the scenes of the American offensive. The version history will remember. No, the transaction was not made by an investment bank, it is the result of discussions that began a decade earlier, when the introduction of Iliad Exchange, and slowly matured over development operator. According to him, teams Xavier Niel fourbiraient their weapons for months or years ... The story is a bit more complex.
Bridled ambition in France
Behind the bluster and story telling kept, the 9th of professional asset Challenges latest ranking is primarily motivated by the desire to prove the universal success of its model. Free is, he thinks, the model of the telecom operator of the twenty-first century. He toyed with the idea in 2011 to become the second French operator Orange to tickle. Alas, the competition watchdog has quickly dissuaded to buy SFR. In the spring, he hoped to get their hands on Bouygues Telecom, Bouygues but Martin found his shamefully low offers.
Above all, the acquisition of SFR Numericable sticks in his craw. "The operation of Patrick Drahi [Numericable owner] was very upset, says one expert in the case. There surely an element of ego in his project for T-Mobile, but it does not only to have articles in the press, there is a real belief around this deal. "
In an interview with the Wall Street Journal, August 1, just after the revelation of its offer, Xavier Niel has the same operation as a vital movement "Iliad still has a few years of growth in France, but with this operation we prepare for growth in the coming decade. "Creator Free already has some experience abroad. He piloted remotely, in 2012, launching Golan Telecom in Israel founded by his protégé Michael Boukobza-Golan. And in April, he won Monaco Telecom for € 325 million.
A well-oiled scenario
The recipe is the same each time. It is summarized in a chart revealed at the presentation of the results of Iliad, which details the cost savings that the group intends to operate at T-Mobile: 24% in the network, 24% in IT services, 20% in the customer management, 13% in sales, marketing and advertising for the essentials. In all these areas, Free innovated, including developing tools internally.
The inventor of the Freebox however knows that integrating an operator takes a lot of energy. In this area, his personal history is also not very convincing: the redemption of the Internet service provider Alice, in 2008, resulted in the virtual disappearance of society. Remains a discrete commercial offer low cost Internet opportunely emerged in the spring when Bouygues Telecom began to cut prices in the fixed. Even engage in a complicated operation, so as to get their hands on one of the largest operators in the world in order to make the most energy expended!
Mid-June, the founder of Free gives his go. His strike team gets underway. This is perhaps the philosopher's stone of the success of Xavier Niel: a small group of men ready at any time to continue the odyssey traced by their leader. There, in the heart of the operating system, the very secret Rani Assaf Floor on the network and computer systems. This man, whom no picture exists, lives in Montpellier. Xavier Niel is considered as the most important man of the company, before himself. To work with the banks, the founder of Free sits on Thomas Reynaud, its paying agent, now assistant general manager, head of a team of five young guns - there is still a woman - under 35 years .
A lack of awareness
Around these pillars Iliad gravitate few key characters. First Vincent Le Stradic, the head honcho telecoms Lazard, he met two years ago through Matthieu Pigasse, co-shareholder with Xavier Niel in the World Group. He participated in the rise in emergency meeting in late June at the Paris headquarters of the Rue de la Ville l'Eveque, to complete the $ 15 billion of financing. Jean Bonnafé, CEO of BNP Paribas, and Samir Assaf, head of the investment group at HSBC, made the trip in person. They expected a small European outlet, in the category of Monaco Telecom. They fail to get out of their chairs by reading the target ... Passed surprise, they sign with both hands.
Finally, there has Boukobza Michael, who lives in Tel Aviv but is regularly commandeered by Xavier Niel when to develop a restructuring plan. The man has earned the nickname Bazooka during its three-month mission conducted in the World, in 2010, just after the takeover by the trio Bergé-Niel-Pigasse.
The conquest of America is a different story. Xavier Niel certainly has major American shareholders, and he has made a name in Silicon Valley investing in Nest, a startup sold € 2.4 billion to Google. But his reputation remains modest. "Who the hell are these guys?" (Who are these guys?) Exclaimed, John Legere, the CEO T-Mobile, from his office in Bellevue, near Seattle, learning disbelief, the tender submitted by the Iliad team in late July. "The synergies they're talking about are mainly on management, said a banker. Explain that they are able to increase the margin of 20-30% is an insult to the CEO." Bob Eatroff, banker Morgan Stanley maneuvering for Deutsche Telekom, was then quick to demand a detailed his Parisian colleagues on this troublemaker telecom brief.
The sense of timing
As financial analysts parading on Bloomberg TV trays, little secret of their skepticism about the ability of "bad boy" to win the bet. Will he join forces with pension funds or major American telecom players? Even the Paris Bourse scares. Title Iliad lost a quarter of its value since the announcement of the Offer Free on T-Mobile.
Fortunately for him, his sense of timing also works overseas. The surprise was complete when fuitent, July 31 in the Wall Street Journal, the intentions of the French. He was not intimidated by the emissaries of Deutsche Telekom warning:. "You're too late, we almost signed with Sprint" In late July, he's missing on the contract signing Masayoshi Son, the CEO truculent Japanese SoftBank Group, owner of Sprint, to marry the two small mobile USA. John Legere, CEO of T-Mobile is preparing, meanwhile, to touch his bonus and to lead the new group.
But on August 1, the FCC, the American Communications Authority, published a memo putting severely cautioned engaged: Constable vetoes the joint venture they created to purchase frequencies for sale in the coming months. "A substantial lessening of competition," Judge authority. "We have a boyfriend!" Welcomes Xavier Niel with his commando team. Thunderclap, August 5: Masayoshi Son throws in the towel.
In Bonn, the headquarters of Deutsche Telekom, the covered Niel eyes change. Certainly Tim Höttges, CEO of the German operator, offering sweeping 's Iliad , too low. But the candidates are not lining up. After the veto competition authorities in late 2011, following the sale signed with AT & T, Sprint is the removal of very bad news. The group sees a profiler consolidation of the European market and, if he wishes to lead the dance, he needs cash. Xavier Niel knows. There is a year the UK Vodafone has pulled $ 59 billion of new money from the sale of its 45% stake in Verizon Wireless, the number one in the United States. So, the German manager is willing to make concessions. A poker game is plays on both sides of the Atlantic. End of the first round in the coming days.