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Businesses Communications

French Provider Free Could Buy US Branch of T-Mobile 111

Posted by Unknown Lamer
from the everyone-wants-a-piece dept.
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.
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French Provider Free Could Buy US Branch of T-Mobile

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  • Re:Perspective (Score:4, Interesting)

    by Salgat (1098063) on Thursday July 31, 2014 @07:47PM (#47578645)
    They are doing it to increase revenue/future profit. This is a long term strategy, don't be fooled into thinking they are doing this to be charitable. I think it's great because it means they will have more money to invest in infrastructure in the future.
  • Re:Rejected! (Score:5, Interesting)

    by ArmoredDragon (3450605) on Thursday July 31, 2014 @08:55PM (#47578871)

    I bet I know why they rejected it: If they accept it, then they'll miss out on the $2 billion Sprint will have to pay them when Club Fed rejects the takeover.

    However after that takeover fails (you already know it will,) they pass go and collect $2 billion, and then they can consider Iliad's bid again.

  • by Meeni (1815694) on Thursday July 31, 2014 @09:15PM (#47578941)

    20 euros is inclusive of taxes. France taxes are not super heavy, but still on the upper side, and I'd bet US taxes are lower overall.

    When I lived in France I had Free. Excellent service, very disruptive market strategy. I'm very excited with the news. I'd switch in an eyelash.

  • Because Taxes (Score:2, Interesting)

    by Jodka (520060) on Thursday July 31, 2014 @09:22PM (#47578973)

    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 [wikipedia.org] for that reason. As the WSJ states [wsj.com] (free access to the paywalled article via FaceBook [facebook.com]):

    In 2006, Emerson sought to acquire a company called American Power Conversion (APC). This was a Rhode Island-based company that made more than half of its earnings outside the U.S. Unfortunately, Emerson competed against Schneider Electric, a French company, to acquire APC. Emerson offered more than $5 billion, but ultimately Schneider acquired APC by offering a bid in excess of $6 billion.

    Why was Schneider willing to offer more? Schneider outbid us because France's tax code—typical of most OECD countries—exempts 95% of foreign-source income from taxation, while the U.S. tax code fully taxes such income. APC's profits were worth more to Schneider because, once absorbed, APC's global profits (net of the taxes paid in the countries where those profits were earned) could be repatriated to Schneider's headquarters in France, where they would be taxed at less than 2%.

    In contrast, earnings repatriated to the U.S. are subject to a tax rate of nearly 40%, with a credit for taxes paid abroad on that income. That dramatic difference made it possible for Schneider to offer more for APC. So what had once been an American company became French.

  • Re:Please NO (Score:3, Interesting)

    by synaptik (125) * on Thursday July 31, 2014 @09:32PM (#47579017) Homepage

    Please everyone just leave T-Mobile alone. They are doing great the last few years.

    I agree, but T-Mobile is doing great because they don't *want* to be left alone. They are being so aggressive with their pricing because they want to be targetted for a buy-out. Their parent company, Deutsche Telekom AG, has made it clear that they want out of that business.

  • by Anonymous Coward on Thursday July 31, 2014 @11:57PM (#47579409)

    Un France (but not exclusively), the expectation and the law is that the advertised price is the price that you will pay, period. Even restaurants have service included in the price, tipping is no longer required, expected, nor is it in the habits of locals anymore.
    Consumers are well protected overall by legislation, anything aiming to deceive them is considered scandalous and fixed in the following law.
    It's not perfect, but it certainly makes day-to-day life easier.

  • The west coast in general has good TMo coverage (all the cities including the little ones, every time I checked when driving the I-5 from Seattle to SF, and the local ski areas) but the only other place I've checked was in DC (where it was fine). However, I scarcely even consider that "travel". For *REAL* travel, TMo is by far the best carrier option. I spent a month in Europe earlier this year. Six countries, and I had service everywhere in every one of them including on the Swiss ski slopes. I sent/received well over a thousand texts and a number of MMS, streamed music all day (at 128Kbps, that adds up fast), did email and web browsing and so forth, and Skyped with friends and family. I also received several calls which I let go to voicemail, then checked the voicemails. All on my normal US T-Mobile SIM card.

    Extra cost for all that stuff while abroad? $0.00.

    It would have cost something to use voice calls over the cellular network, but with things like Skype or Google Voice (plus the free and unlimited - though not super-fast - data), that was never needed. T-Mo's "WiFi Calling" feature also lets you make or receive calls, while overseas, without any charge as long as you're on WiFi. I'm planning to visit Indonesia soon, and T-Mobile says I'll be covered there too. It's a *fantastic* carrier for people who travel.

  • Meh (Score:2, Interesting)

    by Anonymous Coward on Friday August 01, 2014 @01:18AM (#47579547)

    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.

In seeking the unattainable, simplicity only gets in the way. -- Epigrams in Programming, ACM SIGPLAN Sept. 1982

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