French incumbent Orange has reportedly mandated Lazard and Credit Suisse to study a potential acquisition of smaller rival Bouygues Telecom.
The two companies have been in talks for a few weeks now, but Orange has not decided yet whether or not to go…
French incumbent Orange has reportedly mandated Lazard and Credit Suisse to study a potential acquisition of smaller rival Bouygues Telecom.
The two companies have been in talks for a few weeks now, but Orange has not decided yet whether or not to go ahead with a deal, according to Reuters citing people close to the situation.
Orange was not immediately available to comment on the report.
In mid-May, local newspapers revealed the 27% state-owned telco was interested in buying number three Bouygues Tel, which lost out to Altice and Numericable in its attempt to take over wireless competitor SFR earlier this year.
Subsequently, the incumbent confirmed it was “exploring the opportunities the changes in the telecommunications sector in France present”.
Orange CEO Stephane Richard and Martin Bouygues have reportedly met several times recently. A deal with the leading operator could value Bouygues Tel at around €6bn and see parent Bouygues and its partner JCDecaux own 10% of Orange, according to earlier reports.
TelecomFinance understands that the incumbent has long favoured consolidation of the mobile sector, since the arrival of Free has also put pressure on its operations.
The merger of Numericable and SFR concerns management at Orange, and the telco plans to complain to the French regulator about certain aspects of the proposed deal, which would create a direct competitor to the incumbent. It also filed a complaint about a network sharing deal signed earlier this year between Bouygues Tel and SFR.
But industry experts have expressed doubts about the likelihood of an Orange/Bouygues Tel deal going ahead given the antitrust issues involved. A marriage between the two would create an entity controlling more than half of the mobile market.
However, Reuters quoted a source as saying that Europe’s antitrust regulator told Orange a deal with Bouygues Tel could be possible with conditions. The incumbent is now waiting for the regulatory decision on the E-Plus/O2 merger in Germany to have a clearer idea of what it may need to do to secure approval. The ruling is expected by 10 July.
According to Les Echos in May, Bouygues was ready to sell its frequencies to Free for €1.8bn, in an agreement very similar to the one announced a few months ago, when the operator was looking to buy SFR.
