Tycoon Drahi Said to Prepare for Bouygues Telecom TakeoverManuel Baigorri, Matthew Campbell and Francois de Beaupuy
Cable billionaire Patrick Drahi’s Altice SA is stepping up plans for a potential takeover of mobile carrier Bouygues Telecom, setting the stage for more consolidation in France’s telecommunications industry, according to people familiar with the matter.
Drahi’s media and telecom group is examining the financial and regulatory obstacles to a transaction with France’s third-largest wireless provider, and advisers to the two companies have held informal discussions about a potential deal, the people said, asking not to be identified discussing a private matter. Altice believes a transaction is feasible and could pass muster with authorities and French politicians, they said. No formal offer has been made and Altice could still decide against proceeding with a bid, they said.
Discussions of a takeover of Bouygues Telecom by Xavier Niel’s Iliad SA stalled last year over valuation disagreements, with owner Bouygues SA seeking as much as 8 billion euros ($9.1 billion) for the asset, people familiar with the matter said in June. For Drahi, an acquisition of Bouygues Telecom would be Altice’s third multi-billion dollar deal in a year, after it acquired French mobile-service provider SFR and then agreed in December to buy Portugal’s biggest carrier from Oi SA.
A spokesman for Luxembourg-based Altice declined to comment on what he referred to as rumors. A spokesman for Paris-based Bouygues declined to comment, referring to an October statement that the company is implementing a stand-alone strategy in a market with four operators.
Altice Chief Executive Officer Dexter Goei said in November that Altice would be the “most natural buyer” for Bouygues Telecom.
A combination of SFR with Bouygues Telecom under Altice would create a new national leader in France with more than 30 million wireless customers, supplanting Orange SA, according to data compiled by Bloomberg Intelligence. It would also reduce the country’s number of wireless networks to three from four, following similar moves in Germany, Ireland and Austria.
Drahi’s advisers believe competition concerns can be resolved in part because French officials supported a 2014 proposal to merge Bouygues Telecom and SFR, then owned by Vivendi SA, one of the people said. However, limiting job losses would be a key concern for politicians in France’s barely-growing economy, making integration a delicate challenge should a deal proceed, the person said.
Bouygues Telecom reported 2013 earnings before interest, taxes, depreciation and amortization of 880 million euros and Ebitda of 538 million euros in the first nine months of 2014.
European carriers are merging as costs rise for high-speed networks and the pace of smartphone adoption slows, putting pressure on profits. In the U.K., BT Group Plc this month agreed to acquire wireless leader EE Ltd. for about $19 billion.