PARIS Aug 1 For all the surprise that has
greeted French telecom group Iliad's bid for T-Mobile
US, there is one thing a procession of broadband and
mobile firms have learnt in recent years: don't underestimate
The 47-year-old, one-time computer hacker built up Iliad as
France sought to open its telecom market in the early 2000s with
a mantra of rock bottom prices and simple offers. It is now a
$16 billion business that has grabbed 13 percent of France's
mobile market in little more than two years, leaving rivals
issuing profit warnings and seeking merger deals in its wake.
On Thursday, Iliad - which has long been tipped to strike a
deal to bolster its No.4 position in French mobile - surprised
investors with a $15 billion offer for 56.6 percent of T-Mobile
US, the No. 4 U.S. mobile operator.
The move pits Niel against Sprint, the No.3 U.S.
mobile firm owned by Japan's Softbank that has also bid
for T-Mobile US.
And if successful, he would be taking on the $150
billion-plus giants of AT&T and Verizon Communications
in the world's second-biggest mobile market by revenue
Jacques-Antoine Granjon, the founder of flash sales site
venteprivee.com and a friend of Niel's, said the plan was by no
means as improbable as it sounds.
"His journey in France has taken him quite far and he now
has the means both financially and organisationally to go
further," Granjon told Reuters. "France had become a bit small
for him. He needed to spread his wings."
Niel's successes have also not gone unnoticed across the
Atlantic. "He's got a big network of contacts in the tech and
start-up world there. People in the industry know all about
Iliad there - Steve Jobs used to call him to talk about
telecoms," Granjon said.
FIGHTING EVERY STEP
An auto-didact who dropped out of university - de rigeur for
Silicon Valley entrepreneurs but almost unheard of among
successful businessmen in France - Niel has fought every step of
the way to become a billionaire pillar of the establishment.
Even former French President Nicolas Sarkozy once weighed in
against him, deriding Niel as the "peepshow guy" in reference to
an adult chat and dating service he once set up and questioning
whether France really needed another mobile operator.
But the father of three persevered, fending off lawsuits and
lobbying, and amassing a fortune on the way. Niel is 144th on
Forbes' list of billionaires, and ranks among the top ten in
France, ahead of the likes of luxury tycoon Bernard Arnault.
Niel had his third child with Arnault's daughter Delphine,
an executive at luxury goods house LVMH, and is now
cheered on by even a government minister.
"Bravo @Xavier75 who aims to conquer T-Mobile in the United
States," tweeted Economy Minister Arnaud Montebourg, who only a
year ago criticised Niel for destroying jobs. "France wishes you
Not that Niel courts the limelight. Described by colleagues,
friends, and rivals as brilliant, awkward and loyal to a small
circle of allies, the long-haired, jeans-wearing executive is
also deeply solitary.
"I remember the night after our second day of roadshow in
London for the Iliad IPO," said one person who works with Niel,
referring to the 2004 flotation of the company that was then
focused on broadband.
"Everyone was drinking and laughing, but Xavier was kind of
looking moody and quiet. When I asked him what was up, he said
'you guys don't understand anything. The real next thing for
Iliad is mobile. We need to be in mobile.'"
"He always has the next 3 moves in mind," the person said,
speaking on condition of anonymity.
While his company focuses on low prices, Niel himself is
also frugal, with one employee saying in 2011 he still had to
ask for his approval each time he bought 50 euros worth of pens.
With such a close eye on his company's own resources, Niel
takes pleasure in tormenting his deep-pocketed competitors.
"I ride my bike to work and their CEOs drive around in
chauffeured cars with a team of PR people," he quipped at a
lunch with reporters in 2011.
He has become a member of the elite though, living in an
exclusive gated commuting in Paris frequented by pop stars and
fellow billionaires and is a co-owner of the influential le
Monde newspaper and several magazines.
Raised in a middle-class Paris suburb, Niel became an
amateur computer hacker. At 20, he'd dropped out of maths
courses preparing France's brightest for top universities and
started an adult chat and dating service on Minitel, rudimentary
networked computers that pre-dated the Internet in France.
About seven years later, he used that money to start Iliad
and there too, a hacker spirit ruled. Niel asked engineers to
build telecom hardware for Iliad's networks because
off-the-shelf gear was too expensive and didn't have the
functionality he wanted, such as delivering TV over telephone
At night, Niel would surf E-Bay to bid on telecom gear being
sold by U.S. companies that went bust when the Internet bubble
burst, sending off $10,000 payments for routers and devices that
his engineers would then re-purpose.
Niel was an operator in the regulatory sphere too, twinning
Iliad's fate to the government's desire to spur competition in
the sector and surfing on the trend for liberalisation.
Fifteen years later, Iliad has over 6,800 employees, more
than 14 million mobile and broadband subscribers, and quarterly
sales of over 1 billion euros ($1.3 billion).
Despite this, Neil has at times been his own worst enemy:
only six months after Iliad's high-flying stock market debut in
2004, he was jailed for a month on charges that sex shops in
which he was a partial investor had encouraged prostitution.
He was cleared of the prostitution charges but paid a
250,000 euro fine and got a suspended sentence of 2 years for
misappropriation of funds. He emerged fiercely protective of his
privacy and ultra-driven to succeed, say people who know him.
Niel has looked for ways to give back to the community,
though in typically idiosyncratic fashion he spends his money to
address industry problems rather than via traditional charities.
He teamed up with two entrepreneur friends to found a school
for Internet careers in Paris after noticing a dearth of
qualified recruits for Iliad. He started a seed fund that backs
start-ups to fill a gap left by wary French banks.
Niel is also still prepared to put his own money into deals,
with a person familiar with the matter saying he will put up to
1 billion euros into the T-Mobile bid.
"Sure he's making a big bet, but the life of an entrepreneur
is made of taking risks," venteprivee.com's Granjon said. "The
richer you get the bigger the bets. Otherwise you might as well
hang it up and put your money in a savings account."
(1 US dollar = 0.7445 euro)
(Editing by Mark Potter)