Altice France Rejects €17 Billion Bid from Telecom Rivals

Altice France has rejected a joint bid from three leading French telecom operators to acquire its subsidiary, SFR. In a memo to employees on Wednesday, Altice CEO Arthur Dreyfuss confirmed that the non-binding offer, valued at €17 billion (approximately $19.8 billion), was immediately dismissed. The bid aimed to purchase a significant portion of Altice France’s assets, with an overall company valuation of €21 billion, and had sparked speculation regarding potential consolidation in the European telecom sector.

The joint offer was submitted by Bouygues Telecom, Iliad’s Free, and Orange late on Tuesday. While Bouygues acknowledged Altice’s decision to reject the proposal, Iliad and Orange did not provide comments to Reuters. Following the announcement, shares of Bouygues rose sharply, reflecting optimism about potential sector consolidation, even as the French government indicated it would closely monitor the situation.

French Finance Minister Roland Lescure emphasized the government’s commitment to ensuring consumer protection and service quality in light of the proposal. In an interview with French radio RTL, he stated, “I’m going to be vigilant about two things: the impact on consumer prices and the impact on the quality of service.” He reiterated that an independent competition authority would assess any future proposals thoroughly.

Market Reactions and Future Implications

The rejection of the bid did not deter market enthusiasm for Bouygues and other telecom stocks. Bouygues shares, which had reached their highest price in over seven years earlier in the session, still traded approximately 8 percent higher shortly after the announcement. Shares of Orange increased by 3 percent, while the broader French benchmark CAC 40 index gained over 2 percent. Italian telecom operator Telecom Italia saw its shares rise by 2.4 percent as well, indicating investor confidence in potential shifts within the European telecom landscape.

SFR, which holds the position of France’s second-largest telecom provider, serves over 19 million mobile subscribers and 6.1 million fibre customers as of June 2023. France currently has four major mobile operators, including Orange, Bouygues, Iliad’s Free, and SFR. Any moves to consolidate this number would necessitate approval from French and European regulatory bodies.

Regulatory Considerations in Potential Consolidation

The European Commission has previously approved similar mergers, such as the MasMovil and Orange merger in Spain, which resulted in the formation of the €18 billion MasOrange operator. However, such approvals often come with stipulations designed to protect competition. Benoit Coeure, the head of the French antitrust agency, indicated in a July interview with daily Les Echos that any proposal involving SFR would be evaluated carefully, balancing potential benefits against the challenges of reduced competition.

Analysts from J.P. Morgan described the bid as better than expected, suggesting that it could set the stage for further consolidation in the sector. Giorgio Tavolini, an analyst from Italian brokerage firm Intermonte, noted that a successful acquisition of SFR could lead Iliad to reconsider its operations in Italy, where it has struggled to generate profits.

In summary, while Altice France has dismissed the recent bid for SFR, the dynamics of the European telecom market remain fluid, with investor interest and regulatory considerations shaping the landscape for potential future deals.