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Giganto French telco merger: Altice makes eyes at Bouygues

EU and French anti-trust watchdogs play whack-a-mole with merger proposals

By Simon Rockman, 22 Jun 2015

Despite Margrethe Vestager – the EU’s anti-trust supremo – railing against telco mergers earlier this month, French mega-company Altice has made a €10bn bid for the telco part of rival Bouygues.

Altice has made the bid thorough Numericable-SFR, formed when Numerical bought the SFR network from Vivendi last year for €17bn.

A merger between the market's number two player, Numericable-SFR, and its number three, Bouygues, would see the company leapfrog Orange to become the largest network in France.

The fourth player is Iliad, which entered the market as a disrupter and aggressively drove down prices. A merger between two of the networks is likely to reduce competition and this will cause concern at both a European and French national level. The French economy minister, Emmanuel Macron, has gone on record to oppose the deal, telling French publication Journal du Dimanche (en Francais): "I say and repeat that consolidation today is not desirable for the sector. The employment, investment and the best service to consumers are priorities. The consequences of a consolidation are these negative ways, as demonstrated by the recent cases in Europe."

The French regulator has spectrum auctions pending and bidding between four rivals is always going to be more attractive than bidding between three.

A merged Numericable-SFR/Bouygues would also have a considerable amount of French spectrum and it is reported that Iliad would ease the deal by buying spectrum from the merged company, in much the same way as Three in the UK bought 1800MHz spectrum when T-Mobile and Orange merged to form EE.

The Financial Times [paywall] reported that the talks between Numericable-SFR and Bouygues are “very advanced”.

Both Patrick Drahi – who controls Numericable-SFR – and Iliad have made bids for Bouygues in the past, but at lower sums. With regulators starting to take a dim view of consolidation, the window of opportunity might be closing and Altice will want to move quickly. ®

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