PARIS, Aug 1 (Reuters) - 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 Xaviel Niel.
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 after China.
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.
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 good luck."
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 lines.
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