News
No consolidation in France as incumbent operator announces end of discussions with rival.
Orange’s hopes of acquiring Bouygues Telecom have been dashed following the failure of talks between the pair.
The French incumbent announced late on Friday that despite in-depth discussions with its smaller rival, the companies have not been able to reach a deal.
"The decision has therefore been taken to end the discussions with Bouygues that have been ongoing since 5 January 2016," Orange announced, in a short statement.
It did not give a reason for the breakdown of the talks.
Neither did Bouygues, which issued a statement confirming that its board of directors made the decision to bring the discussions to an end.
Bouygues also noted that the talks with Orange covered a number of key areas, including the size of equity stake it would receive in Orange, its own valuation, and its employees’ futures.
An often-quoted French press report from January suggested that any deal would value Bouygues Telecom at €10 billion, with Bouygues receiving a 15% stake in Orange worth €8 billion plus €2 billion in cash. Neither operator confirmed those figures though.
Orange and Bouygues have been locked in negotiations for the past three months, during which time there have been countless rumours swirling surrounding the progress of the proposed deal, particularly with regard to the assets the companies would doubtless have had to sell off in order to win competition authority approval.
Iliad-owned Free Mobile looked set to be a major beneficiary of an Orange-Bouygues tie-up, with reports suggesting it would acquire spectrum, network assets and customers divested by the merged entity. Orange itself confirmed that its takeover talks involved negotiation with a third party, but did not directly name Free.
France’s fourth mobile operator, SFR, was also in line to acquire customers as a result of the deal, it seemed.
As the news broke that the Orange-Bouygues deal was off, Iliad issued a statement of its own, reiterating its growth targets.
"Following the failure of the discussions between Orange and Bouygues concerning the consolidation of the French market, Iliad carries on its development, notably by accelerating its rollouts of landline and mobile ultrafast broadband networks and continuing to propose straightforward offerings at attractive prices," it said.
The telco reiterated that it aims to reach a 25% share of the fixed broadband market and 25% of the mobile market "in the long term".
Bouygues also talked up its own potential in the French market.
"In a market where the possibility of consolidation is now ruled out for the long term, Bouygues Telecom will continue its standalone strategy, which has already resulted in a return to growth in sales and EBITDA in 2015," the operator said.
"Bouygues firmly believes the telecoms market exhibits strong growth potential, driven by the exponential development of digital uses, and that Bouygues Telecom is particularly well positioned on this market to benefit from this momentum," it added.
Orange’s ability to compete as an unmerged entity in the French market was never in doubt. Nonetheless, the company drew attention to the Essentials2020 strategic five-year plan it launched just over a year ago and confirmed all its financial targets.
