Orange and Bouygues have both confirmed that they are in talks about French consolidation, with local press reporting that the €10bn deal would comprise €2bn in cash and a 15% stake in the French incumbent,
Orange (EPA:ORA) today confirmed reports that it has “renewed preliminary discussions with the Bouygues Group (EPA:BOUY) with a view to a consolidation with Bouygues Telecom.”
In a statement, the incumbent said it was “exploring the opportunities available within the French telecoms market, while keeping in mind that its investments and its solid position afford it a total independence in its approach.”
Bouygues also confirmed the talks, saying: “As it is interested in opportunities that would enable it to bolster its long-term presence in the telecoms sector, Bouygues announces that preliminary discussions have started with Orange to look at the possible options. Therefore, a confidentiality agreement was signed today by Bouygues and Orange.”
The talks, according to Le Jornal du Dimanche, centre around a €10bn (US$10.8bn) deal involving €2bn (US$2.2bn) in cash and a 15% stake in Orange, as well as disposals worth €5bn (US$5.4bn) in order to appease the French competition authority, which would reportedly review any deal.
As TelecomFinance has reported, advisers had previously pitched a split sale of Bouygues Telecom’s network and services businesses to Iliad and Numericable-SFR.
Bouygues Group, which according to Pitchbook has an overall enterprise value of €18.9bn (US$20.3bn), last summer turned down a €10bn offer by Altice. French Economy Minister Emmanuel Macron, who had opposed that deal, has following the country’s spectrum auction – which raised €2.8bn (US$3bn) – softened his stance on consolidation.
Last month, when Bloomberg first reported the incumbent’s potential interest in Bouygues’ telecom and media assets, Orange played down – but did not deny – interest in a four-to-three merger, saying: “In France, Orange is the telecoms operator that has the least need for consolidation.”
Its CEO, Stéphane Richard, said in November that the company had no plans to acquire content, noting strict regulatory conditions.
Bouygues, for its part, said it had “no plans to withdraw from the telecoms and television sectors and reaffirms its long-term presence in these two industries.”
The conglomerate owns 100% of number three cellco Bouygues Telecom, and 44% of Société Télévision Française 1 (TF1), which comprises freeview and pay-TV channels.
Industry and advisory figures have long hoped for a consolidation of the French mobile market, currently home to four players: Orange, Numericable-SFR, Bouygues Telecom and Iliad (which trades as Free).
Until now, the major stumbling block has been chairman and CEO Martin Bouygues himself, who in the words of one source, “keeps saying he does not want to sell Bouygues Telecom, but no one believes him”.
