After losing its bid to buy SFR, Bouygues Telecom might just be bought itself. According to the French newspaper Le Parisien, the number three carrier in France is in talks over a potential sale to Iliad, the owner of Free, the fourth largest operator. The parties are reportedly still far away from agreement with Bouygues wanting €8 billion ($11 billion) while Free does not want to go above €5 billion ($6.9 billion).
On April 5, Vivendi chose to sell its telecom unit SFR to Altice, which controls the cable company Numericable, ending a months-long bidding war between Altice and Bouygues over the the second largest player in the market. Under the terms of the deal, Altice will pay €13.5 billion ($18.64 billion), and merge SFR with its Numericable. Vivendi will retain 20% of the merged company and receive an additional €750 million if earnings targets are met.
The deal sets up four major players in the already overheated French telecom market: Orange, SFR, Bouygues and Free. While in last place, Iliad’s Free has disrupted the market with its low cost offers that forced others to cut prices. Because of the intense price competition, some observers believe that Bouygues has little alternative other than to make some kind of agreement with its former adversary.
“It is hard to see how Iliad and Bouygues can rationally avoid a mutual embrace causing France to settle into a market of three broadly integrated players,” Robin Bienenstock, Bernstein Research analyst, told the Wall Street Journal.
More telecom news from Europe:
European court rejects data retention rules The European Court of Justice invalidated an EU directive that required telecom operators to retain all their customers’ communications data for up to two years. First introduced in 2006, the measure was intended to combat crime and terrorism.
Struggling Telecom Italia sells HQ, seeks advice from AT&T. Shortly after the indebted telecom giant sold its Milan headquarters for €75 million ($103 million), CEO Marco Patuano paid a visit to the U.S. to meet with AT&T CEO Randall Stephenson. Patuano said the company was a good “turnaround” case study.
U.S. blasts idea of Europe-only network. In its annual review of trade laws, the U.S. criticized proposals to build a European communication network to keep information within Europe. Following the NSA spying scandal, Germany and France have been discussing building a European network to keep data safe.
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