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Business

SFR bids for Bouygues in French telecom merger

Shares in leading French telecoms operators have surged after one of its top players, SFR, officially launched a takeover bid for rival Bouygues in a merger that would profoundly shake Frances telecom sector.

European telecommunications company Altice announced Monday it had made an official offer to buy French mobile phone operator Bouygues Telecom through its subsidiary Numericable-SFR.

Altice is owned by Franco-Israeli media magnate Patrick Dahi, who is reportedly offering Bouygues shareholders more than 10 billion euros ($ 11.3 billion) to buy them out.

Bouygues Telecom confirmed it had received the "unsolicited" offer and said it would hold a meeting of its board on Tuesday to discuss the takeover bid.

"There is no negotiation underway," stressed Bouygues.

Traders at the Paris Stock Exchange were jubilant at the prospect of consolidation in the French telecoms market and rushed to buy stock in both companies. At the opening bell, Numericable-SFR was up more than 13 percent while Bouygues was up more than 14 percent. Another player, Iliad, which owns operator Free, gained more than 10 percent.

Government resistance

The Socialist government in Paris, however, is less excited about the transaction, fearing the merger would undercut competition in the French mobile phone sector, where a busy playing field has kept prices low for consumers.

"Now is not the time for opportunistic tie-ups which may be of interest to some people but which are not in the public interest," Economy Minister Emmanuel Macron told the news agency AFP. "I say and I repeat that consolidation is currently undesirable for the sector," he added.

Marcon stressed that "jobs, investment and better customer service" were priorities for the French government, and that recent takeovers in Europe had a "negative" impact on the sector.

A tie-up between the two telecom firms could pose a strong challenge to French mobile phone market leader Orange. The merged unity would have 30 million customers and combined sales of 15 billion euros annually.

Tycoon on spending spree

Patrick Drahi's media interests already include a majority stake in the French daily newspaper Liberation and L'Express news weekly, as well as full ownership of Israeli TV station i24 News.

In March 2014, his Altice group won a bidding war with Bouygues for SFR - France's second largest mobile operator - which was then merged with its Numericable cable operation.

Altice also acquired the Portuguese assets of Brazil's Oi-Portugal Telecom last year, and in May 2015 the group bought 70 percent of Suddenlink Communications, the seventh-largest US cable company, for $9.1 billion.

uhe/tko (AP, AFP, Reuters)

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