France’s third-largest mobile operator Bouygues Telecom has hired HSBC and Rothschild to advise on a potential offer for competitor SFR, according to Reuters citing people close to the situation.
Earlier this week, SFR’s parent Vivendi confirmed an…
France’s third-largest mobile operator Bouygues Telecom has hired HSBC and Rothschild to advise on a potential offer for competitor SFR, according to Reuters citing people close to the situation.
Earlier this week, SFR’s parent Vivendi confirmed an approach from telecoms holding Altice about a potential tie-up of SFR with its cableco unit Numericable.
Since then, rumour has emerged that Bouygues but also latest entrant Free Mobile were considering bidding for the asset, as the players seek to strengthen their position in France’s highly competitive mobile industry.
Bouygues refused to comment.
The recent network sharing agreement between Bouygues and SFR, which received regulatory approval, could indicate that the French competition authority is now more open to the idea of consolidation than it was in 2013.
Bruno Lasserre, the chairman of the watchdog, told Le Monde’s Thursday edition that no concrete M&A proposal had been submitted to the regulator. But unlike last year, when he opposed any form of consolidation, Lassere said now that the regulator’s answer to a merger could either be “no” or “yes but”.
A deal between Numericable and SFR is unlikely to face similar resistance as the number of mobile players would remain at four.
The potential merger, which would value SFR at more than €15bn (US$20.6bn), could reportedly see Vivendi hold 32% of a combined SFR/Numericable entity while Altice would own more than 50%.
Just days ago, SFR CEO Jean-Yves Charlier still spoke about IPO preparations for the unit, saying he was hopeful for a stock market debut in early July. But industry experts have long speculated that Vivendi may go down the M&A route instead for several reasons.
They argue that declining prices since the launch of 4G and the arrival of Free in 2012 may negatively affect a listing. Meanwhile, Altice has become a serious buyer since it successfully raised €1.5bn in an IPO in January. Numericable had been listed a few months before that for €750m.
A merger of Numericable and SFR is estimated to deliver synergies of up to €6bn, but it would be a highly leveraged transaction leaving the companies with around €8bn worth of debt. Therefore, there are concerns as to whether Altice would be able to fund SFR/Numericable’s investment needs looking ahead.
