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French incumbent reportedly entering formal merger talks with rival.
Orange is still saying nothing when it comes to the latest rumours linking it with a move for rival French operator Bouygues Telecom.
Sources cited by Le Journal du Dimanche on Sunday claimed that the two companies signed a confidentiality agreement on Christmas Eve, with several meetings due to take place this week. Valuation, governance, staff, and competition will be discussed, the sources said.
According to the report, Bouygues Telecom is valued at €10 billion. The deal would see Bouygues receive a 15% stake in Orange valued at €8 billion, while the remainder would be paid in cash.
In an email to Total Telecom on Monday, a spokeswoman for Orange declined to comment, repeating the company line that "in France, Orange is the telecoms operator that has the least need for consolidation."
That was the message the last time Orange was linked with Bouygues Telecom, in early December.
At the time, sources told Bloomberg that the companies were holding preliminary merger talks.
The rumours persist though, and the JDD report over the weekend contains several details about the structure of the deal, and how Orange and Bouygues plan to address competition concerns.
Indeed, sources said in the report that Orange will negotiate the sale of base stations, customers and spectrum to rivals Numericable-SFR and Free Mobile. As well as appeasing competition authorities, Orange hopes to reap €5 billion from the disposals.
JDD’s sources also claim that the merger between Orange and Bouygues Telecom would be subject to review by France’s competition watchdog, rather than by the European Commission.
This seems highly unlikely though, given the alleged merger would reduce the number of mobile operators in France to three from four, and would give the combined entity a mobile market share of almost 60% before divestments.
