French operator bids US$7.2bn for rival

Vivendi confirmed that its mobile telecoms division, SFR, was in talks with Neuf Cegetel to negotiate a US$7.2 billion bid for France's third-largest celco. If successful, SFR, the country's second biggest operator, will be in a better position to compete with France Telecom's mobile phone unit, Orange.

The drive behind this bid, according to industry watchers, is SFR's desire to review the deployment costs and opex associated with 3G. The two firms have been cooperating on a number of infrastructure sharing deals, and SFR is now thought to be wanting to have greater control over its long-term strategy. SFR is already the biggest client of Neuf Telecom whereby it uses its network to offer Internet access while Neuf Telecom resorts to SFR for combined fixed/mobile services.

However, a possible hurdle to a formal takeover will be the reaction of the French telecoms regulator and the EU, with two rivals looking set to join forces, thereby putting at risk nine years of European Commission efforts to push member states into liberalising telecoms markets to boost competition.

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