France pushes for just 3 operators as Orange raises concerns over SFR deal

France's government said it is still pursuing its goal of reducing the number of mobile operators in the country from four to three as it pushes for greater consolidation of the French telecoms market in order to reduce competition.

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Stephane Richard

Disappointed by the failure of Bouygues to buy SFR from Vivendi and merge it with Bouygues Telecom, Economy Minister Arnaud Montebourg said the government will make sure the market eventually shrinks to three.

"We will get there, to having three operators that are able to invest and that will stop destroying jobs and killing each other," Montebourg told the National Assembly, the lower house of France's parliament, Reuters reported.

A merger of Bouygues Telecom with SFR would have achieved that goal, but instead SFR is to be merged with Altice-owned Numericable in a move that will create a stronger rival to Orange, Bouygues Telecom and Iliad's Free Mobile.

France's mobile market was turned on its head in early 2012 when Free Mobile introduced cheap mobile plans on the market and sparked a ruinous price war that saw its rivals launch low-cost brands. Bouygues Telecom was particularly hard hit, and is already reported to be working on an austerity plan that could see up to 2,000 job cuts.

Montebourg this week called on Bouygues Telecom to merge with a rival, the Wall Street Journal reported, and indeed the operator has previously considered merging with rival Iliad.

Orange CEO Stephane Richard also said Bouygues Telecom is facing a real challenge in the market. In an interview with the Financial Times, Richard said the company is clearly assessing different options, but needs to make a decision quickly.

Meanwhile Richard has also outlined his intention to raise some concerns over the regulatory treatment of the SFR deal. According to the FT, he plans to raise issues over the equal treatment of fibre, copper and cable, the application of VAT on copper and fibre, and access to bundled TV content.

At the same time, Richard told the FT that he sees a brighter future ahead for the telecoms sector with signs that the price war may be over. "We are at the end of the cycle. We have had massive price cuts in the French market - 30 per cent on average in mobile contracts - so we are now at the low of the lowest in Europe. At a level not sustainable for some of the players for long," he said.

Numericable also said this week it is on track to complete its merger with SFR by the end of the year, Bloomberg reported.

For more:
- see this Reuters article
- see this Wall Street Journal article (sub. req.)
- see this Financial Times article (sub. req.)
- see this separate Financial Times article (sub. req.)
- see this Bloomberg article

Related Articles:
Report: Bouygues Telecom faces massive job cuts after failure to buy SFR
For European telecoms operators, 4 is a crowd
Vivendi rebuts claims by Martin Bouygues of 'anomalies' in SFR process
France to review Numericable-SFR deal, pursue more mergers at home and in Europe
After SFR, Bouygues Telecom's future could lie with Iliad

 

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