Numericable inks Virgin Mobile France deal

Numericable inks Virgin Mobile France deal

30 JUN 2014

French cable operator Numericable signed its anticipated deal to acquire Virgin Mobile in the country, taking on the MVNO ahead of its anticipated merger with SFR.

It was announced that Numericable was in exclusive talks with Omer Telecom, the holding company which operates Virgin Mobile France, in May, with an enterprise value of €325 million given.

It was also said that Vivendi, owner of SFR, would contributed €200 million to finance the deal, which would in turn increase its stake in Numericable after its merger with SFR.

Carphone Warehouse Group, which owns 46 per cent of Omer Telecom, noted that the deal is still subject to the approval of the French Competition Authority.

When it announced its results last week, Carphone Warehouse said that while Virgin Mobile France “delivered a resilient performance”, it would be “best served by being part of a larger organisation”.

For the year to 31 March, profit at Virgin Mobile fell to £1 million from £7 million, on revenue which decreased to £346 million from £385 million.

The revenue drop was said to be “broadly in line with expectations and reflects market re-pricing in the past two years, driven by intense market competition, which has caused downward pressure on outbound ARPU.”

Its total customer base stood at 1.67 million, down from 1.71 million, due to shrinkage in both its contract and prepaid customer tallies.

In this regard, Virgin Mobile France has suffered in much the same way as companies such as SFR, Orange and Bouygues Telecom following the entry of low-cost Free Mobile several years ago, which has led to price pressure and consolidation.

While Numericable (and its parent Altice) is one of the key movers here with its deals for SFR and Virgin Mobile France, there has also been speculation that Bouygues Telecom stands to be acquired, with both Orange and Iliad (owner of Free) mooted as buyers.

But there have been disputes about the valuation of Bouygues, and news last week that its parent company is set for a windfall following the sale of Alstom – in which it holds a significant stake – to General Electric also means that it may not be in any hurry to do a cut-price deal.

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