Emmanuel Macron, France’s economy minister, said the country’s operators should think less about consolidation and more about investment.
“In France the sector has reached a point of equilibrium,” he said in an interview with French daily Les Echos. “Time is not right for a consolidation between operators but for investment. Consolidation means less equipment, fewer networks and fewer jobs.”
Competition has heightened in France since the arrival of budget player Free Mobile, owned by Iliad Group, in 2012.
Since then, Free Mobile has grabbed a 15 per cent share of the mobile market, putting a squeeze on rivals’ margins in the process.
Stephane Richard, Orange Group CEO, has often voiced disquiet about intense competition and price wars.
“I think that a well-regulated market, with three operators, would function very well,” he said last month. “With four operators it can operate but it’s more complicated and it will require cooperation between operators.”
There has been consolidation of sorts in the French market, after Alice’s cable operator subsidiary, Numericable, purchased Vivendi’s SFR – the second-largest mobile operator – last year.
But that still kept the number of mobile operators at four, and may have been one of the reasons why Vivendi preferred Altice’s bid and rejected SFR overtures from Bouygues Telecom, the third mobile player in France.
Without the prospect of mobile operator consolidation, a Numericable-SFR tie-up would likely face less regulatory scrutiny than a deal involving Bouygues Telecom.
Altice CEO Dexter Geoi claimed last year that Numericable-SFR would be a “natural buyer” for Bouygues Telecom, but Martin Bouygues, the operator’s owner, has repeatedly said he is not interested in selling.
Xavier Niel, head of Iliad, speaking last year, said he had no interest in buying Bouygues Telecom, but boldly declared that he would play a pivotal role in any M&A activity that might happen in France. “The market’s consolidation cannot happen without us,” he said.