After losing out in the race to acquire Vivendi’s SFR, Bouygues Telecom now finds itself the subject of takeover talks by the Iliad Group, according to a local newspaper report.
Le Parisien, cited by Reuters, said Iliad – which runs Free Mobile, France’s fourth-placed operator – is discussing the acquisition of third-placed Bouygues.
The newspaper said Bouygues valued its telecoms business at €8 billion but Iliad was only willing to stump up €5 billion.
Joss Gillet, a senior analyst at GSMA Intelligence, does not expect Bouygues to make up its mind quickly on an Iliad takeover and that it was simply reviewing its options after being beaten by Altice to acquire SFR.
“The final decision,” he said, “will be linked to the impact the Altice/SFR deal will have on the network-sharing agreement Bouygues and SFR signed earlier this year, and any regulatory decisions on that matter.”
Gillet added that, potentially, Bouygues could either remain in its third-position and partner with Orange to initiate cost saving programmes, or merge with fourth-placed Iliad.
“Whichever option best supports Bouygues’ long-term network investment plans and profitability is most likely to happen,” said Gillet.
Claudio Aspesi, a senior analyst at Bernstein Research, appears much more certain of a tie-up between Bouygues and Iliad.
“It seems likely that one way or another Iliad and Bouygues will end up in each other’s arms and that France will settle into a market of three broadly integrated players,” he said in a research note.
Aspesi believed a merger between Bouygues and Iliad, France’s fourth-placed mobile operator, would be reviewed by the French regulator rather than Brussels and could come “relatively quickly”.
“This [the merger] would have few remedies and lead to very rapid wireless pricing repair as it would eliminate competition amongst the two price discounters,” added the analyst.
As such, claimed Aspesi, Orange – France’s largest mobile operator – would benefit from a Bouygues/Iliad tie-up.
An earlier Reuters report said a combination of Bouygues and Iliad “makes sense on paper”. Iliad needs to enlarge its mobile network, but is much bigger in the fixed broadband market. Iliad claims second spot here while Bouygues runs the smallest fixed broadband operation in France.