The French government affirmed the potential acquisition would affect investment in the mobile market and planned spectrum auction
France’s second-largest telecommunications operator Numericable-SFR has made an offer to buy smaller rival Bouygues Telecom for approximately $11.4 billion in cash, according to a report by the Journal de Dimache.
A deal between the two operators would create France’s largest mobile telephony operator and would reduce the local market to a three-player scenario. The other two mobile operators in the market are Orange and Free Mobile.
Bouygues Telecom has confirmed receipt of an unsolicited offer by Numericable-SFR and said that its board will meet on June 23 to discuss the offer. Bouygues added that no negotiations between the two companies are underway.
Numericable-SFR has already secured financing with banks BNP Paribas and JP Morgan, according to press reports. Numericable-SFR is a subsidiary of European telecoms group Altice, which is owned by French-Israeli businessman Patrick Drahi.
However, the French government showed its opposition to the move as it would affect investment in the local mobile market.
“Now is not the time for opportunistic tie-ups, which may be of interest to some people but which are not in the public interest,” French Economy Minister Emmanuel Macron said in a statement. “I say, and repeat, that consolidation is currently undesirable for the sector. Jobs, investment and better customer service are the priorities.”
The government also believes that a consolidation in the market would affect the spectrum auction to award frequencies in the 700 MHz band, scheduled for this year.
Iliad, which controls mobile operator Free, said it has entered into negotiations with Numericable-SFR regarding the possible purchase of assets tied to the pending deal. The move would seem to indicate Numericable-SFR views any potential would require some form of divestments in order to garner government approval.
In related news, French telecom regulator ARCEP submitted its draft decisions on the future assignment and allocation of the 700 MHz band to the members of the Electronic Communications Advisory Committee for their opinions. Once it has received the CCCE opinions, ARCEP plans to define its final proposal in early July so the ministers involved in the process can issue the call for applications later in the month.
Interested operators will have until the end of September to file their applications. ARCEP plans to carry out the spectrum auction in the fourth quarter of 2015, and to award the licenses to the winning candidates before the end of the year. The government aims to award six 2×5-megahertz blocks in the 700 MHz band with a reserve price of $472.8 million for each block.
Germany recently concluded a 700 MHz spectrum auction that generated $5.75 billion in total proceeds.
