Orange is reportedly hiring banks to examine the possibility of purchasing rival French operator Bouygues Telecom in a deal that could be worth as much as €6 billion, reports Reuters.
Sources said investment banks Lazard and Credit Suisse have been hired by the French number one operator to look at acquiring the third-largest operator in the market.
It is understood Orange has made no firm decision about whether to proceed with a bid, with previously reported discussions having taken place for around six weeks.
Stephane Richard, Orange CEO, recently said that cutting the number of mobile network operators in France from four to three is a matter of urgency.
Another source said Orange had been encouraged by preliminary talks with Europe’s antitrust body, which suggested a deal could take place with acceptable conditions.
Together, Orange and Bouygues account for 49 per cent of the mobile market, meaning European competition regulators are likely to closely scrutinise any potential deal that would see the companies join forces.
Orange will await the decision regarding Telefonica’s acquisition of KPN’s E-Plus in Germany — due on 10 July — in order to understand what steps it may need to take for similar consolidation to take place in France.
Until recently, Bouygues was vying with cable operator Numericable to acquire French number two operator SFR from media company Vivendi. Since losing out to Numericable, Bouygues has been touted as an acquisition target.
Free Mobile, the Iliad-owned low-cost operator whose entry into the French market at the beginning of 2012 led to intense competition, could also be interested in Bouygues, according to the report.
Orange is also keen to take Bouygues out of a network sharing deal it signed with SFR in February as it would reduce the cost savings generated by the potential acquisition, a source told Reuters.
The operator filed a complaint about the network-sharing deal with the French competition authority in April.
Bouygues’ market share has been hit hard by the increased competition generated by the arrival of Free Mobile, and the firm said in May it would cut an additional €300 million from its annual costs by 2016, with job losses a major part of this.