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The offer, announced last night, would have seen Bouygues Telecom, Iliad, and Orange divide the company’s assets between them
Late last night, reports revealed that a Bouygues, Iliad, and Orange had joined forces to put together a €17 billion offer to buy and carve up the majority of rival operator SFR’s assets.
Now, less than a day later, it seems that this approach has been ‘immediately rejected’, according to an email seen by the media that had been sent to SFR staff by Altice France head Arthur Dreyfuss.
An official statement on the rejection has yet to be published.
The proposed deal, which had been rumoured to be in the works since earlier this summer, would have seen SRF’s three national telco rivals split the majority of SFR’s assets between them, with Bouygues taking 43% of the assets, Iliad 30%, and Orange 27%.
All three operators would have taken a piece of SFR’s consumer business, including mobile and fixed broadband customers, while the B2B unit would have been divided solely between Bouygues and Iliad.
The company’s physical network assets, both fixed and mobile, and the company’s spectrum holdings, would largely have been split between all three partners.
The proposal did not include some of Altice’s smaller assets, including stakes in Intelcia, UltraEdge, and XP Fibre, and alsoAltice group’s activities in French overseas departments and regions.
In total, the deal valued SFR at around €21 billion – far short of the roughly €30 billion price point sought by SFR’s billionaire owner Patrick Drahi, which may well explain the offer’s rejection today.
This kind of tripartite carve up would not without precedent; in Brazil in 2020, for example, Telefónica, Claro Brasil, and TIM Brasil struck a similar partnership to divide the mobile unit of floundering telecoms operator Oi. However, it is somewhat unusual, potentially giving the regulatory bodies a challenge in accurately assessing the deal’s impact to consumers.
Historically, EU regulators have been reticent to allow large-scale mergers that reduce the number of telecoms players in the market, fearing that the reduction in competition would drive up prices and reduce incentives for innovation. The telecoms industry itself, on the other hand, has been calling for consolidation for many years, arguing such deals are key to unlocking long term investment in the sector. In fact, just last month, the GSMA were once again called on regulators to overhaul their merger guidelines to facilitate M&A.
Sentiment towards such mergers is thawing, however. The recent merger of Three and Vodafone in the UK and Orange and MasMovil in Spain suggests that getting regulatory approval for such a deal, while troublesome, is potentially achievable.
For now, it is unclear whether Bouygues, Iliad, and Orange will return to the negotiating table. We expect further updates imminently.
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