Altice, Vivendi sign final agreement on SFR-Numericable merger

Altice and Vivendi said they have signed the definitive agreement on the merger of their respective French units Numericable and SFR, dashing any last lingering hopes that opponents to the deal might have had that the planned union would fail at the final hurdle.

In a joint statement, Altice and Vivendi said the agreement was signed after a "very constructive dialogue" with the relevant employee works councils, concluding talks that have been ongoing since the Vivendi supervisory board unanimously selected the Altice-Numericable offer for SFR on April 5. The two companies noted, however, that the deal is still subject to the approval of relevant administrative authorities, which would include the French anti-trust authority.

At closing, Vivendi will receive €13.5 billion ($18.3 billion) and keep a 20 per cent stake in the newly merged company for a period of at least a year, after which time it could sell the stake. The French media group, which after the sale of SFR is no longer involved in the telecoms sector, will also receive an earn-out of €750 million depending on the future financial performance of the new group.

Once telecoms player SFR is joined together with cable operator Numericable, a new fixed and mobile powerhouse is set to emerge on the French telecoms market, creating a more formidable rival to Orange, Bouygues Telecom and Iliad, which owns Free.

The SFR-Numericable merger has come as a particular blow to Bouygues Telecom, which had hoped to be able to secure SFR in order to prop up its own business but was thwarted by the Vivendi board. Bouygues Telecom has suffered the most from the cheap mobile deals introduced by Free Mobile in January 2012, and has seen its turnover fall by 26 per cent over two years, while costs have increased by 10 per cent. The company also incurred an operating loss of €19 million in the first quarter of 2014.

After talks to merge with either Orange or Iliad were also inconclusive, Bouygues Telecom now says it plans to cut 1,516 jobs. However, analysts have suggested that Bouygues Telecom's "aggressive plan" was in fact designed to bring consolidation to a head, and believe that a merger with one of its rivals is still very much on the agenda.

A merger of Bouygues Telecom with a rival operator is the preferred option of the French government, which wants to see the number of mobile operators reduced from four to three in order to limit what it sees as very harmful competition on the mobile market.

Economy Minister Arnaud Montebourg has previously said that France's operators should agree on a deal that would make such job cuts unnecessary and reduce the effects of the mobile price war.

For more:
- see this statement from Altice and Vivendi

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