Orange, Bouygues pour cold water on consolidation hopes in France

Orange and Bouygues Group signalled that further consolidation of the French telecoms market is receding into the distance, despite the best efforts of the French government to encourage domestic operators to merge.

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Martin Bouygues

In a brief statement on Wednesday, Orange more or less ruled out any chance that it would link up with a rival operator, at least for now.

"Orange has examined the possibilities of participating in an operation that would lead to consolidation in the French telecoms market, and believes that it cannot pursue this avenue at the present time as the conditions that the group has set have not been met," the operator said.

Orange is understood to have held talks with Bouygues over a possible merger with Bouygues Telecom, after Bouygues failed to win the hand of SFR. Bouygues is also reported to have held similar talks with Iliad, which provides fixed and mobile services under the Free brand.

The acquisition of SFR from Vivendi by Altice-owned Numericable is now putting further pressure on the existing operators as it will not only maintain the number of mobile operators at four but will also see a strong cable operator merge with a mobile operator to create a new fixed and mobile powerhouse on the French market. What's more, Numericable has also just agreed to buy Virgin Mobile France from Carphone Warehouse and the Virgin Group for €325 million ($443.8 million).

This pressure especially applies to Bouygues Telecom, which has suffered the most from the low-cost mobile tariffs introduced by Free Mobile in January 2012.

Martin Bouygues, the head of the construction-to-media conglomerate and controlling shareholder, also admitted to France's National Assembly this week that discussions on a sale of Bouygues Telecom to a rival operator have so far been unsuccessful, according to Reuters. The talks are believed to have foundered over price expectations and other issues.

The comments by Orange and Bouygues will come as a blow to the French government, which had hoped to see a reduction in the number of mobile operators from four to three in order to create a less cutthroat pricing environment and save jobs

Bouygues Telecom has also been preparing itself for a future in a market with four mobile network operators, and its plan includes around 1,500 job cuts.

For more:
- see this Reuters article

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