Talks on a potential takeover of Bouygues Telecom by Orange are entering the home straight, although it still appears possible that a merger may not happen at all.
According to a report by Les Echos, negotiations are progressing well and the chances of reaching an agreement are rated as "good". A deal would require the sale of some of Bouygues Telecom's assets to rival operators SFR and Iliad/Free to satisfy competition concerns.
"On these issues, talks have advanced and a deal is almost done with Patrick Drahi's SFR and Xavier Niel's Free," Les Echos said, citing a source close to the matter.
However, time is running out: both Orange Group CEO Stephane Richard and Bouygues CEO Martin Bouygues have indicated that they would be willing to negotiate until Mar. 31 but not beyond. Richard is said to be leading the discussions on behalf of all four operators.
The paper further noted that Iliad would take on fewer assets than had been initially expected and possibly no mobile clients.
One sticking report is reportedly the question of the future stakes that would be held by Bouygues and the French government in Orange. The state currently holds a 23 per cent stake and wants to retain a blocking minority. Bouygues is understood to be aiming for about 15 per cent of Orange.
Orange's Richard has previously said that the chances of securing a deal were 50-50. Reports have said that the transaction could be valued at €10 billion ($11.1 billion).
Orange and Bouygues Group confirmed in January that they were in preliminary discussions over a possible merger between Orange and Bouygues Telecom.
A successful outcome of the talks would further enhance Orange's position on its domestic market and would also reduce the number of mobile players from four to three.
Bouygues Telecom has been consistently regarded as the clear target in any consolidation of the French market. Only in June last year, the company's owners rejected a €10 billion takeover offer from Altice and continued to insist that higher sales and cost savings would help boost profitability in the longer term.
For more:
- see this Les Echos article (in French)
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