Faced with a search for additional financial backing and the need to convince a sceptical Deutsche Telekom, French operator Iliad set itself a mid-October deadline to press on or walk away from its T-Mobile US bid, according to Reuters.

Majority shareholder Deutsche Telekom doubts whether Iliad can improve T-Mobile US as the French operator has no presence or history in the US market. Under the Iliad proposal, the German operator would retain a stake in the US operator.

The French operator submitted an offer at the beginning of August worth $15 billion, or $33 per share, for a 56.6 per cent stake in the fourth largest operator in the US, which was rejected as inadequate by Deutsche Telekom. Sources said an offer in the range of $35 to $40 per share would be more favourably received.

Subsequently, Iliad has been in talks with banks and private equity firms so that it can come up with an improved offer.

It is talking to several US banks, in addition to current lenders HSBC and BNP Paribas, according to sources.

Iliad CFO Thomas Reynaud said the ratio of net debt to EBITDA would not pass 4.5 times, as the company seeks not to overburden itself in the pursuit of its US target. Any capital increase to fund the bid would be limited to €2 billion, he said.

In addition to banks, Iliad is also talking to private equity funds, including KKR, as it searches for financial backing for its bid.

The French firm is hoping for positive feedback from private equity firms so that it can put down an improved bid by the second week of October. It could offer between $35 and $40 per share for a stake in T-Mobile US that would range from 60 per cent and 90 per cent, the actual figure determined by private equity interest, said sources.

The additional factor is winning around Deutsche Telekom. If the German parent of T-Mobile US does not show enthusiasm, Iliad will not want to bother with a prolonged pursuit. Reports have said Deutsche Telekom is in two minds about the sale, since T-Mobile US is a growth asset.