France has been a highly interesting market to watch since January 2012, when enfant terrible Free Mobile launched its low-cost mobile plans and changed competition on the mobile market forever. Since then we have seen the emergence of new brands such as Sosh and a price war that continues to have repercussions for all market players.
For consumers, Free Mobile--controlled by billionaire Xavier Niel--has been a boon. After all, what's not to like about a mobile phone tariff that costs just €2 a month (or zero if you also subscribe to Free's fixed services with Freebox) for two hours of mobile calls and unlimited SMS, as well as 50 MB of 3G or 4G data.
For rival operators, Free Mobile has been a less than welcome development, forcing them to lower their own prices, and causing ongoing consolidation talk with many market participants believing France would be better off with only three mobile players. Already, Bouygues Telecom and Altice-owned Numericable have fought over SFR, with Bouygues losing out to Altice.
Bouygues Telecom is itself now regarded as the obvious takeover candidate, and the acquisitive Altice--controlled by the other entrepreneurial telecoms billionaire in France, Patrick Drahi--is understood to be stepping up plans to make a bid for the company, according to reports this week. Altice has previously described itself as the "natural buyer" of Bouygues Telecom, while Niel said in November that he is not in the market for Bouygues Telecom.
Nonetheless, both Niel and Drahi will be decisive in any market consolidation: Drahi because his company looks to be the most likely at present to make a bid for Bouygues Telecom, and Niel because antitrust approval of any proposed SFR-Numericable-Bouygues Telecom merger could be contigent on the combined company shedding assets, which could then be taken on by Niel's company Iliad.
At the same time, both Bouygues Telecom and Iliad have been pushing ahead with their strategies--Bouygues making changes to its tariffs and content offerings as part of a bid to operate as a standalone company in a market of four players, and Iliad continuing to expand its infrastructure. Orange also turned in a fairly respectable performance for 2014, reporting a slow-down in its revenue decline and showing signs of EBITDA stabilisation.
The window of opportunity to consolidate in France may be open for now, but it might not be open for much longer. It will be interesting to see if and when, and under what terms, Altice makes its move.--Anne