June 25, 2018 / 9:44 AM / 2 months ago

France's antitrust watchdog prepares for possible telecoms tie-up

PARIS (Reuters) - France’s antitrust watchdog is keeping in touch with the country’s four telecoms operators as speculation about potential mergers in the sector has resurfaced.

FILE PHOTO: Patrick Drahi, founder and controlling shareholder of the the telecommunications group Altice, June 22, 2017. REUTERS/Lucas Jackson -/File Photo

French telecoms shares rose last month when the head of the country’s telecoms regulator Sebastien Soriano said it could be open to consolidation in the industry.

The need for major investment in networks and a price war is putting pressure on France’s four main operators Orange (ORAN.PA), Bouygues Telecom (BOUY.PA), Altice Europe (ATCA.AS) and Iliad (ILD.PA).

Isabelle de Silva, the head of France’s competition authority, said the context was favourable for a new round of merger talks.

“We have regular contacts with the operators that allow us to anticipate certain transactions that could materialise,” she said in a news conference on Monday.

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While declining to comment further on the different possible tie-up scenarios, de Silva said she welcomed the investments made by France’s operators in the fixed and broadband networks since the last attempt at market consolidation failed in 2016.

At the time, market leader Orange had sought to buy up Bouygues Telecom and then sell of parts of the business to Altice and Iliad.

Bouygues Telecom has since then improved its finances and Altice’s French business SFR is tipped as a likely target.

SENSE OF URGENCY

SFR was approached last month by Bouygues, two sources close to the matter have told Reuters, confirming earlier reports by French newspaper Le Monde.

Patrick Drahi, majority-owner of Altice, and Bouygues boss Martin Bouygues met at the end of May, the sources said.

The broad offer made then by Bouygues to acquire SFR was quickly rejected by Drahi, they added, without elaborating.

The bosses of all four groups want to alleviate the pricing pressures, which have made France one of the cheapest markets in Europe.

“Everyone suffers, the French market is the only one in Europe to lose value,” an Orange executive said.

There is a sense of urgency, the sources said, because operators are expecting a government announcement towards the end of June on new spectrum licences.

Once published, this would prevent the country’s four operators from open formal merger talks for several months, the sources also said.

“With the spectrum decree coming up shortly, I assume that nothing will happen imminently,” a banker familiar with the industry said.

Reporting by Mathieu Rosemain and Gwenaelle Barzic in Paris; Arno Schuetze in Frankfurt; Editing by Sudip Kar-Gupta and Jane Merriman

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