Vivendi Starts Talks to Share SFR Mobile Network With Bouygues

Vivendi SA is in exclusive talks with Bouygues SA about sharing part of their French mobile-phone networks to cover more ground for less.

The rivals, both based in Paris, said in a joint e-mailed statement that they can reach a deal by year-end. A sharing agreement between SFR and Bouygues Telecom would need approval from the companies’ labor representatives as well as French competition and telecommunications regulators, according to the statement.

Network sharing has been one way European carriers are trying in order to cut back on investments amid sluggish spending by consumers and shrinking phone bills while maintaining attractive service offers. In one of the first major moves of this type in Europe, Deutsche Telekom AG and Orange SA in 2010 set up a joint venture in the U.K. under the brand EE to cut costs by combining their local networks and purchasing activities.

Vivendi’s French phone unit SFR and Bouygues Telecom have fought to keep clients from switching to low-cost provider Iliad SA, which in January 2012 entered the market with packages as cheap as 2 euros per month. The price wars have pushed Iliad’s competitors to cut costs to stop their profits from falling further.

Still, they face a tough review before regulators opposed to consolidation in France. The French competition authority in March said that while sharing networks in the least-populated areas of the country will be encouraged, such deals in dense cities will be studied cautiously. Straight mergers between France’s carriers won’t be allowed, the watchdog then said.

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