The French government may like the sovereign move, but the wider regulatory test will be how the EU views the acquisition in terms of telecom sector consolidation
Bouygues Telecom, Iliad and Orange have submitted a €17bn joint bid to acquire a significant share of the telecommunications activities of the Altice France group, the parent company of SFR.
The acquisition to consolidate the country’s mobile market was mooted in July. It was reported then that Patrick Drahi was preparing to sell SFR, France’s second-largest telecom operator, as part of efforts to reduce debt across his Altice empire, which he built through a $60 billion acquisition spree.
Analysts value SFR at about €21 billion. Following a February deal that cut Altice’s debt from €24 billion to €15.5 billion, Orange, Bouygues and Iliad had begun exploring ways to divide SFR’s assets. Earlier in October, Altice France closed its €24 billion debt restructuring, which paved the way for the sale.
The structure of the SFR deal would see Bouygues Telecom take the bulk of the corporate business, plus the mobile networks in less-populated areas. Iliad-Free and Orange would share the consumer customers, while infrastructure and frequencies would be divided between the three, according to criteria yet to be defined. The three operators would set up a joint company to manage the transition, guaranteeing continuity of service for SFR customers.
The split between the operators in terms of price and value is around 43% for Bouygues Telecom, 30% for Iliad and 27% for Orange. Give the hurdles ahead, it is a non-binding offer, which will have to go through due diligence, financial and operational assessments, union consultations and regulatory approvals. In fact, the three operators are at pains to repeatedly state that there is no certainty at this stage that this indicative offer will lead to an agreement.
At the end of these various regulatory and due diligence stages, any assets that cannot be transferred immediately to each of the three operators concerned would be transferred to a joint company responsible for managing operations during a transition period that would notably allow for the gradual migration of customers. The joint company will rely on Altice group employees.
The deal excludes holdings in Intelcia, UltraEdge, XP Fibre and Altice Technical Services, as well as the Altice group’s activities in French overseas departments and regions.
4 to 3 argument again
The sale, which was likely after Altice’s restructuring concluded, would reduce France’s operators from four to three – potentially boosting profits of the remaining three through synergies. No doubt the French government and EU regulators will scrutinise the deal closely due to competition and consumer price concerns – but each will have differing issues.
Consolidating control in French hands plays well into the French government’s sovereignty push and despite a lot of noise about European consolidation, it will be fascinating to see which way the EU goes on this as it will be another precedent, beyond the MasOrange deal, which really cracked open the gates for mega-consolidation deals.
Kester Mann, Director Consumer and Connectivity at CCS Insight, added, “The precarious financial situation of Altice was the trigger for the offer. The company has been looking to sell assets to reduce debt following a major acquisition spree a decade ago. Altice’s mobile arm, SFR, is the jewel in its crown.”
The three operators emphasised the deal would “consolidate control over strategic infrastructure in France” and lead to all sorts of investments in network resilience, cybersecurity and AI.
“The announcement could herald one of the most significant moments in France’s telecoms history, irreversibly changing the mobile and fixed-line landscape in one of Europe’s biggest markets,” according to Mann.
The operators seem confident the deal will go ahead. “We think the transaction can go through because otherwise, we wouldn’t have done it, “Bouygues group CEO Olivier Roussat told Reuters on a conference call. Asked how soon a binding offer could be made, Roussat said, “perhaps at the end of the first quarter of 2026.” He added that the entire process, including structuring the business among operators, could take over four years.
Mann said, “The complex nature of the deal, combined with the major challenge to gain approval , underlines the operators’ determination to come together in pursuit of scale, growth and improved returns in one of Europe’s many highly competitive markets.”
He points out that carving up an operator between rivals is not unprecedented. In 2020, for example, Telefonica, Claro and TIM Brasil acquired the — mostly mobile — assets of Brazilian operator, Oi.
