Bouygues says 'non' to French consolidation, shuns Altice

Bouygues Group rejected Altice's unsolicited offer for its telecoms unit, asserting that Bouygues Telecom is "well-positioned" to take advantage of future growth in the telecoms market and can revive profits on its own.

In a statement issued after a meeting of Bouygues' board of directors on Tuesday, the group said the offer by Altice--believed to be around €10 billion ($11.4 billion)--would face anti-trust hurdles and present a risk to jobs.

"Not everything is about money," group CEO Martin Bouygues said on the French RTL radio station, Bloomberg reported. "Antitrust authorities would impose very strong remedies to go from four to three" operators, the CEO said.

In its statement, the group added that Bouygues Telecom "has the means to return to an EBITDA margin of at least 25 per cent by 2017 (the same level as in 2011), a margin that should continue to rise in the longer term."

The board also raised concerns that the offer did not factor in the consequences that a merger of Numericable-SFR with Bouygues Telecom would have on the 700 MHz frequencies auction, which is scheduled to take place before the end of 2015. The French government hopes to raise at least €2.5 billion from the auction, but if Numericable-SFR buys Bouygues there would be one fewer bidder taking part.

Altice made an offer on Monday to acquire Bouygues Telecom via its French unit Numericable-SFR. Such a deal 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.

The move prompted an immediate reaction from the French government, which signalled its opposition to the proposed deal. 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.

Analysts from Jefferies International said the "categorical terms" in which Bouygues couched its rejection would make it difficult for Altice to return to the table with an improved offer.

"It is hard to see how Numericable-SFR can indemnify Bouygues against its likely €1 billion+ spectrum outlay. Once auction proceeds are received, government opposition might soften. For now, Numericable-SFR faces hard questions," the analysts said in a research note.

Meanwhile Orange told Reuters that while it accepted Bouygues' decision "with serenity", it still believed that the French telecoms market could not support four telecoms operators in the long term.

For more:
- see Bouygues Group's statement on the Altice offer
- see this Bloomberg article
- see this Reuters article

Related articles:
Altice makes €10B offer for Bouygues Telecom
France sets €2.5B reserve price for 700 MHz auction
French mobile price declines slowed in 2014
France's operators sign accord to cover all mobile 'not spots' by 2020
Bouygues Telecom maintains 2015 outlook after posting Q1 loss

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