Vivendi has reportedly set a deadline of Wednesday this week for any bids for SFR, its French mobile unit, with speculation that cable company Numericable and the Bouygues conglomerate are preparing offers.
The move puts pressure on Bouygues which has only recently been connected with a possible bid. In contrast, Numericable has been in discussions with Vivendi about a possible deal for the past year, with price appearing to be the sticking point.
Sources told Reuters that Vivendi is not expecting a bid from French mobile newcomer Iliad, which has also been mentioned as a possible bidder for SFR. Another source said Iliad had organised financing in case it wants to make a later bid.
If an acquisition was agreed, it would be reviewed by French competition authorities rather than the European Union, according to Reuters. This is because the companies involved earn more than two-thirds of their revenue within a single EU state.
Bouygues is likely to face more regulatory scrutiny than Numericable due to its ownership of the French number-three operator, and the implications of combining it with SFR, the second-largest operator in France.
News of the deadline comes as something of a surprise after SFR CEO Jean-Yves Charlier said in February that Vivendi is “well advanced” with spin-off plans for SFR, suggesting potential for a trade sale had diminished. The SFR CEO said the aim is for a listing of SFR in early July.
But it was reported yesterday that French cable company Numericable is preparing a €11 billion offer for SFR.
French newspaper, Journal du Dimanche, reported that Bouygues is preparing to top Numericable’s offer and that CEO Martin Bouygues met with French president Francois Hollande to provide reassurance about the impact of SFR and Bouygues merging operations.
Vivendi is understood to still be pursuing a demerger and will decide whether to continue on this route or change course by considering one of the acquisition bids.
The French mobile market has seen tough competition in the two years since Iliad’s Free Mobile entered with its low-cost tariffs. According to Reuters, average revenue per mobile subscriber has fallen 17 per cent since Free’s arrival.
This is why Vivendi wants to sell its interest in SFR to concentrate on its media assets and may also be the reason why market consolidation is back on the cards.