After SFR, Bouygues Telecom's future could lie with Iliad

Vivendi's decision this week to sell French telecoms unit SFR to Altice in a deal worth around €17 billion ($23 billion) opens up questions about the future of Bouygues Telecom, with market watchers continuing to predict that the company will end up in the arms of rival Iliad.

"It is arguably Bouygues that will be most negatively impacted and competitively endangered by the merger of Numericable and SFR," observed Natasha Rybak, principal analyst at Current Analysis.

Rybak added that this is somewhat ironic given that Bouygues Telecom sparked off the triple- and quad-play strategies that have now been adopted by all four French mobile players: indeed, the bedrock of the Altice plan to merge SFR with cable operator Numericable is the ability to offer converged fixed and mobile services.

Bouygues Telecom, which has suffered perhaps the most from the launch of sub-€20 mobile plans by Iliad's Free Mobile in January 2012, may find that Iliad is now its future, in another ironic twist for the operator. The two operators had already agreed that Iliad would buy Bouygues Telecom's mobile network in order to smooth a potential purchase of SFR and pre-empt the inevitable regulatory concerns over a reduction in the number of French mobile operators from four to three.

Reports in the French media claim that Iliad and Bouygues are in negotiations on the acquisition of Bouygues Telecom: Le Parisien reports that after the Vivendi decision the Bouygues group is likely to lean more towards a sale of its network as well as its customer base of 11.2 million mobile customers and 1.9 million fixed Internet customers. However, price aspirations are reportedly wide apart: Bouygues wants €8 billion, while Iliad is prepared to pay €5 billion.

Le Parisien reports that Bouygues has also made contact with Telefonica to put pressure on Iliad.

Bouygues has not commented on the latest rumours, while a person close to Iliad founder Xavier Niel told the paper: "We continue our journey alone and happy."

For more:
- see this Le Parisien article (translated by Google Translate)

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