Numericable’s Lemaitre Says SFR Merger Makes Strategic Sense

Numericable SAS, France’s largest cable operator, said a combination with Vivendi SA’s SFR mobile-phone unit makes sense and it’s an option the newly listed company might pursue again.

“We still believe the rationale is there,” Numericable Chief Financial Officer Thierry Lemaitre said at an investor conference in Barcelona yesterday.

The company last year approached Vivendi about a potential merger with SFR, although concerns over valuation and deal structure stood in the way of a tie-up, people familiar with the matter told Bloomberg News at the time. Numericable has moved on and this month raised about 652 million euros ($879 million) in an initial public offering, allowing Carlyle Group LP and Cinven Group Ltd. to pare their holdings.

Numericable will have to reassess the price and potential synergies if it were to make another approach, Lemaitre said at Morgan Stanley’s annual Technology, Media and Telecoms conference. SFR had revenue of 11.3 billion euros last year, compared with Numericable’s 1.3 billion euros.

Numericable hasn’t held discussions “with SFR or anybody else” in the past six months, while it was preoccupied with preparations for an IPO, he said.

Regulatory Concern

While Numericable hasn’t talked with regulators about a combination with a mobile-phone company, it understands the government would only object to a merger that reduces the number of carriers from four to three, Lemaitre said. Numericable doesn’t own mobile assets, so that won’t be an obstacle, he said.

“Clearly the goal is to be listed on a separate basis, to have a strong internal growth story,” Lemaitre said.

The shares rose 0.9 percent to 28.20 euros at 9:19 a.m. in Paris. They have gained 14 percent since the IPO.

Vivendi, the owner of Universal Music Group and pay-TV company Canal Plus, climbed 1.3 percent to 18.78 euros.

Numericable, which competes with Orange SA in selling TV, phone and faster Internet packages, plans to invest in high-speed fixed networks to tap into rising demand for speedier Internet connections. The cable company is also betting consumers will pay more for their monthly fixed-line subscriptions if their set-top boxes include extra services such as YouTube and Twitter.

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