Vivendi has been approached by telecoms holding Altice regarding a potential tie-up between their respective units, SFR and Numericable.
The French media and telecoms conglomerate however said in a statement that it has not received any formal offer and…
Vivendi has been approached by telecoms holding Altice regarding a potential tie-up between their respective units, SFR and Numericable.
The French media and telecoms conglomerate however said in a statement that it has not received any formal offer and that its supervisory board will announce a decision, if necessary, as and when appropriate.
The statement follows a report from Les Echos at the weekend indicating that SFR CEO Jean-Yves Charlier received the green light at a supervisory meeting on Friday to negotiate a firm agreement.
The newspaper wrote that an agreement in principle has already been reached between the parents of the mobile player and cable operator. A spokesman later denied that a memorandum of understanding has been signed.
The deal, which would value SFR at more €15bn (US$20.6bn), could see Vivendi hold 32% of a combined SFR/Numericable entity while telecoms holding Altice, which controls the cableco, would own more than 50%, according to Les Echos.
A few days ago, Charlier had said SFR was hoping to make its market debut in early July. But industry experts had long speculated that Vivendi may go down the M&A route instead for several reasons.
First, declining prices since the launch of 4G in 2012 may negatively affect a listing. Meanwhile, Altice has become a serious buyer since it successfully raised €1.5bn in an IPO earlier this year.
The M&A deal, which would deliver synergies of up to €6bn, is expected to be highly leveraged with around €8bn worth of debt.
In late 2012, SFR and Numericable had already discussed a tie-up but the cableco’s financial position was reportedly not as solid as it is now, and French authorities were not keen on the idea of convergence.
Since then, Numericable has raised €750m in a listing and is now 40%-owned by Altice.
Separately, the industry’s regulator recently gave SFR the go-ahead to share its network with rival Bouygues Telecom – a sign that convergence and consolidation may be looked at more favourably, as operators’ market shares have been declining since the launch of Iliad’s Free Mobile in 2012.
The CEO of incumbent Orange, Stephane Richard said last year that the size of the French market did not justify four operators. He however stressed he was not considering a network sharing agreement with Free, despite the two companies having a 3G roaming agreement in place.
Some reports suggest that Free and Bouygues could instead consider a merger. Others, including Les Echos, indicate that both Free and Bouygues are planning to make an offer for SFR.
