France’s Numericable-SFR launched a takeover bid for Bouygues Telecom, in a deal that would displace Orange as the country’s largest mobile player.
The proposed combination, which reportedly values number three player Bouygues at €10 billion, will have significant impact on France’s telecoms landscape, reducing the number of players from four to three if successful.
It could also help temper France’s ongoing price war, started by the arrival of new entrant Iliad (Free Mobile) on the scene.
Numericable-SFR, owned by ambitious cable group Altice, announced in a statement it was also in talks with Iliad, the country’s fourth largest player, over the resale of some assets, which reports suggested could include spectrum and other infrastructure assets.
According to sources, Iliad will support the takeover if it is able to get something out of the deal.
It would appear that Numericable-SFR is looking to offer concessions to France’s smallest, and most disruptive, player as a way to soften up regulators as it attempts to acquire Bouygues.
It is, however, still likely to face stiff opposition from regulators and the government over the deal.
France’s economy minister Emmanuel Macron reacted immediately to the bid, reiterating his view that the time was not right for consolidation in France, given the need for investment in the country, reports Reuters.
Budget minister Christian Eckert also weighed in, reportedly telling local radio the government “was not in favour” of the deal, as the country prepares for its upcoming 4G spectrum auction.
The government is aiming to raise at least €2.5 billion, as it looks to auction six blocks of spectrum – which would be impacted by the removal of a potential bidder from the process. It is also urging mobile operators to invest in fibre and improve infrastructure in the country.
According to the Financial Times, talks between Numericable-SFR and Bouygues Telecom are at a “very advanced” stage, and the company’s board is due to discuss the offer on Tuesday.
Altice’s €10 billion offer is above market valuation, and represents a figure that doubles what Iliad offered for Bouygues last year, which was turned down.
Altice beat off competition from Bouygues to acquire SFR from Vivendi last year, but Bouygues has since maintained it would be able to survive in France’s competitive mobile market on its own.
According to a Financial Times source, Orange could also play a role in facilitating the deal by taking on some Bouygues staff to ease government concerns over unemployment. The company reportedly said it is open to discussions, but added it would not “take on employees if it’s not part of package that has value for Orange”.