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French incumbent denies it will make an announcement on Tuesday; is working hard to negotiate customer, asset sales to Free, SFR.
Orange and Bouygues Telecom are close to brokering a deal, according to French press reports, but there is some disagreement on when an announcement will be made.
This weekend an unnamed source cited by Le Journal du Dimanche claimed that Orange will announce an M&A agreement with Bouygues when it publishes its fourth-quarter results on Tuesday.
The telco itself said there will be no announcement on Tuesday, the paper reported, but it is worth remembering that it denied the existence of any negotiations with Bouygues for some time before admitting that talks were taking place.
Tuesday or not, a deal does seem imminent though.
Orange has spent the past few days locked in discussions with another rival, Free Mobile, with a view to agreeing the sale of certain assets in order to facilitate the Bouygues tie-up, Le Journal du Dimanche said.
Given that Orange is the dominant player in the French market, it is unlikely to win regulatory approval – either from Brussels or domestic competition authorities – for a straight takeover of Bouygues Telecom. Asset sales – including spectrum, infrastructure, and customers – will certainly form part of any deal.
The paper’s source suggested Free Mobile has been playing hardball over what it is willing to pay for spectrum divested by the merged entity. However, it has agreed to shell out more money that it was originally willing to part with in return for low-band spectrum.
Free Mobile, owned by Xavier Niel’s Iliad, will spend €2 billion for spectrum and network assets belonging to Bouygues Telekom, the paper said, quoting a report in Le Figaro on Saturday. However, the final distribution of assets, including customers, has yet to be decided, it said.
Bouygues Telecom’s customers will for the most part be split between Free Mobile and SFR, a second source told Le Journal du Dimanche. Its mid-level customers will go to Free Mobile, while SFR will pick up low-cost users from Bouygues’ B&You brand. They will share data customers.
Thus, Free Mobile will spend between €3 billion and €3.5 billion, the source said, while SFR will invest around €2.5 billion.
The majority of Bouygues Telecom’s 550 retails stores will go to Free Mobile, as will its employee base of around 3,000.
All of which begs the question, what will Orange get from the deal?
