Bouygues Telecom has agreed to sell its mobile network and much of its spectrum to smaller rival Iliad for €1.8 billion – if its bid to take over larger competitor SFR succeeds.

The move is intended to head off regulatory concerns over the SFR deal which would create the biggest operator in France.

In addition, Bouygues has received important political support from industry minister Arnaud Montebourg.

Bouygues is one of two bidders for SFR, with the other being cable operator Altice.

But Montebourg has made clear his preference for Bouygues’ offer. He told Le Parisien if the rival Altice bid was successful then the country’s “destructive” price war will not end because the number of competitors would not reduce. If Bouygues’s bid for SFR is successful then the number of competitors will fall from four to three.

Montebourg also made clear the terms under which a Bouygues-SFR deal was acceptable. His “red line” was no job cuts and a commitment to invest in innovation in France.

Meanwhile Olivier Roussat, head of Bouygues Telecom, said the SFR deal would not lead to job losses and would, in fact, cause a €2 billion investment in France.

Buying Bouygues’s network would give a huge leg up to Iliad which has less infrastructure than its longer established rivals. The move would reduce its dependence on a roaming agreement with current market leader Orange.

Under the terms of the deal, Iliad would acquire 15,000 mobile antennae from Bouygues, as well as radio spectrum. So far, Iliad has installed 3,000 antennae of its own, and uses Orange’s network elsewhere in the country to fill out coverage.