Altice makes €10B offer for Bouygues Telecom

Altice tabled an offer to acquire Bouygues Telecom via its French unit Numericable-SFR in a proposal said to be valued at about €10 billion ($11.4 billion) to €11 billion, although the offer price has not yet been confirmed.

Bouygues Group confirmed it had received "an unsolicited offer" from Altice and said its board of directors would meet on Tuesday to review the offer. "No negotiations are in progress," the group made clear.

A deal to combine Numericable-SFR with Bouygues Telecom would create a company with more than 30 million mobile subscribers and revenue of over €15 billion--enough to challenge market leader Orange-- according to data compiled by Bloomberg. It would also reduce the number of French mobile operators from four to three.

Numericable-SFR and rival Iliad also said in separate statements that they are in exclusive negotiations with a "view to purchasing a portfolio of assets in connection with the offer submitted by Altice for the acquisition of Bouygues Telecom by Numericable-SFR."

These assets are understood to comprise Bouygues' mobile network and form part of a "side deal…to ease anti-trust concerns that would inevitably stem from market concentration in mobile," noted analysts from Jefferies International.

The French government has already signalled its opposition to the proposed deal. When rumours of the Altice offer first emerged over the weekend in a report by Journal du Dimanche, French Economy Minister Emmanuel Macron said the timing "isn't right" for further consolidation in the French telecoms market because of concerns over the impact this would have on investment in communications infrastructure and employment.

Macron told Reuters: "I repeat that today consolidation is not something to wish for, for the sector. Employment, investment and a better service for consumers are the priorities. A consolidation would have a negative impact on these issues."

While previous efforts to buy Bouygues Telecom have failed over price, Jefferies analysts noted that the latest offer from Altice "comfortably exceeds previous offers that Bouygues has rejected: the rumoured €8 billion attempt from Numericable last February and €5 billion-€6 billion from Iliad in June 2014."

Jefferies further noted that a deal would have implications for France's 700-MHz spectrum auction, which is scheduled to take place before the end of 2015. The government is hoping to raise at least €2.5 billion from the auction, but if Numericable-SFR buys Bouygues there would be one fewer bidder taking part.

Jefferies predicted that Bouygues Telecom would not abstain from the auction in case the Altice deal does not go through.

"No deal with Numericable-SFR will be approved by November. So, in reality, a €10 billion offer is €9 billion in today's money, maybe less," the analysts said, noting that Bouygues Telecom could pay out at least €1 billion for spectrum before then.

Altice, meanwhile, only recently completed the acquisition of mobile operator SFR and has also been looking to pick up assets in the U.S. to extend its international mobile and cable empire.

For more:
- see this Bloomberg article
- see this Reuters article
- see this article from Journal du Dimanche (in French)
- see this statement from Altice
- see this statement from Iliad
- see this statement from Bouygues Group

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