Orange is holding preliminary talks that could see it acquire domestic rival Bouygues Telecom, it emerged late on Monday.
The French operator is considering such a deal as one of a number of options open to it, Bloomberg reported, citing sources familiar with the situation.
One possible outcome could see construction group Bouygues retain a minority stake in a combined telecoms and media entity, the newswire said.
However, it emphasised that discussions are at an early stage and no formal offer has been made. The companies are currently working out how they could overcome the significant regulatory hurdles such a deal would doubtless throw up.
Indeed, there has been talk of consolidation in the French mobile market on a nd off throughout 2015, but for the most part Orange has not featured in the speculation, given its considerable market share.
According to the latest figures provided by the mobile operators themselves, Orange serves almost 40% of France’s mobile users, excluding customers using MVNO services. Orange and Bouygues Telecom together would account for 59% of mobile network operator customers.
As the incumbent, Orange also has a strong presence in the fixed market, recording 33.3 million fixed-line connections at the end of September. Bouygues Telecom had 2.7 million fixed broadband customers at the same date, making it the smallest player in that market; major rivals Numericable-SFR and Iliad both had more than 6 million.
It is worth bearing in mind that European competition regulators appear to favour facilities-based competition at present, as evidenced by the oft-cited failure of TeliaSonera and Telenor’s plans to merge their Danish mobile operations earlier this year. Doubtless the merger of France’s biggest mobile operator with its number three player – Bouygues Telecom had 326,000 more customers than fourth-placed Iliad’s Free Mobile at the end of Q3 – would raise concerns in Brussels.
Perhaps even more to the point, to date the Bouygues family seem disinclined to exit the telecoms market.
Bouygues’ board in June unanimously rejected an unsolicited bid to acquire Bouygues Telecom from Altice, the ambitious owner of Numericable-SFR. That offer was reportedly worth around €10 billion.
This is not the only time that Orange has found itself at the centre of M&A speculation recently.
In late November the telco denied a Bloomberg report that it was holding merger talks with Telecom Italia. However, it indicated that it is working on its strategy for the future of th e European telecoms market, particularly with a view to the evolution of a single market.
