Orange has played down – but not denied – a report that it is in talks to buy unwilling target Bouygues Telecom. It is possible that previous government opposition to a four-to-three deal could potentially have melted away following last month’s spectrum auction, but it remains unclear whether reluctant seller Martin Bouygues has changed his own mind.
Orange (EPA:ORA) has played down – but not denied – a report that it is in talks to buy unwilling target Bouygues Telecom from conglomerate Bouygues (EPA:BOUY).
“Orange cannot comment on press rumours that have been artificially driving the market for the past two years. In France, Orange is the telecoms operator that has the least need for consolidation.”
According to the Bloomberg report, which cited three sources, the French incumbent was in “early talks” about an acquisition of Bouygues’ telecom and media assets.
In response, the conglomerate issued a short statement in which it said it had “no plans to withdraw from the telecoms and television sectors and reaffirms its long-term presence in these two industries.”
Bouygues owns 100% of number three cellco Bouygues Telecom, and 44% of Société Télévision Française 1 (TF1), which comprises freeview and pay-TV channels.
Orange CEO Stéphane Richard has been vocal about his company’s interest in European acquisitions, including Telecom Italia, but echoed official denials of reported current plans to buy the Italian incumbent.
In September, he said the company had no plans to acquire content. Noting the Autorité de la Concurrence’s strict conditions on content ownership, he said it was safer for Orange to focus on investing in its own network.
Four-to-three remains pipe dream
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).
Over the summer, Bouygues rebuffed a generous €10bn (US$11bn) takeover offer by Altice via its local subsidiary, Numericable-SFR. French Economy Minister Emmanuel Macron also opposed the deal, saying the market could support all four players.
Observers – and Richard himself – had pointed out that a four-to-three deal could become more palatable following the state’s 700 MHZ spectrum auction, which last month raised €2.8bn.
One scenario previously proposed by advisors seeking to circumvent competition concerns and also raise the price tag was a split and sale of Bouygues Telecom’s network and services business, most likely to Iliad and Numericable-SFR.
Were talks between market leader Orange and Bouygues to bear fruit, such a split option could come back into play.
It is possible that leadership by Orange could alleviate the potential for clashes among billionaire telecoms owners Martin Bouygues, Patrick Drahi and Xavier Niel.
That said, the major stumbling block will remain 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”.
