By Ruth Bender And Thomas Gryta 

PARIS--Iliad SA has dropped plans to acquire a controlling stake in T-Mobile US Inc., ending a four-month pursuit that would have marked the French telecommunications company's entry into the North American market.

Iliad said Monday its new bid of $33 a share for 67% of the cellphone operator had failed to pique the interest of majority owner Deutsche Telekom AG and some of T-Mobile's board members.

The French company's first offer of $33 a share for 56.6% of T-Mobile had been rejected in the summer.

The $15 billion T-Mobile bid was seen as a bold move by Iliad founder and largest shareholder, Xavier Niel, who has disrupted France's telecom market by slashing prices. The French billionaire had said he would rely on his low-cost savoir-faire to boost T-Mobile's profitability.

As analysts questioned whether Iliad had the financial muscle to pull off such a deal, the French company's stock kept sliding, losing about 25% since Mr. Niel confirmed his interest for T-Mobile in late July.

Iliad said on Monday it had secured support from banks and private-equity funds to propose buying a larger stake in T-Mobile, but that doesn't appear to have impressed Deutsche Telekom.

T-Mobile US declined to comment, and attempts to reach Deutsche Telekom for comment were unsuccessful.

Iliad's departure could have ripple effects on both sides of the Atlantic.

In the U.S., it leaves T-Mobile, the smallest of the nationwide carriers, without a potential merger partner after 10 months of expectations that a deal of some sort would emerge. Two months ago, Sprint Corp. walked away from its plans to attempt a merger of the two carriers amid strong objections from regulators.

T-Mobile CEO John Legere has defended the company's stand-alone prospects but also has declared openness to deals with partners such as Sprint, pay-television companies and investors from overseas. Dish Network Corp., which lost out on a bid to acquire Sprint last year, has publicly shown interest in T-Mobile but hasn't made a bid.

The carrier spent years hemorrhaging subscribers before Mr. Legere took the reins in 2012. It has added more than four million of the industry's valuable postpaid customers since the beginning of 2013.

Some on Wall Street question the company's ability to maintain its growth trajectory when bigger companies like Verizon Communications Inc. and AT&T Inc. have the advantage of deeper pockets to fund expensive network investments. The carriers will need billions of dollars to compete in crucial upcoming government spectrum auctions that will help determine their ability to grow for years to come.

In France, Iliad's decision to abandon T-Mobile's pursuit could spark a new round of domestic consolidation talks.

Together with Iliad, former monopoly Orange SA, Bouygues Telecom SA and Vivendi SA's SFR, are caught in a price war that is eating into their profit margins and their capacity to roll out new, modern equipment.

The four companies--Vivendi is in the process of selling SFR to Altice SA--have been exploring various ways to combine their operations and reduce the number of mobile-phone operators down to three. Iliad has in the past made an offer to buy Bouygues Telecom but the two parties failed to agree on price, according to people familiar with the matter.

David Gauthier-Villars contributed to this article.

Write to Ruth Bender at Ruth.Bender@wsj.com and Thomas Gryta at thomas.gryta@wsj.com

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