Altice France Rejects €17 Billion Bid, Stalling Telecom Consolidation

Altice France, the parent company of telecom operator SFR, has turned down a joint bid from three of its competitors to acquire the firm. In a memo to staff, CEO Arthur Dreyfuss confirmed the rejection of a €17 billion (approximately $19.8 billion) non-binding offer made by Bouygues Telecom, Iliad’s Free, and Orange. This decision comes as a setback for ambitions of further consolidation within the European telecom market.

The proposal, which aimed to purchase a majority of Altice France’s assets, valued the company at around €21 billion. The bid had initially sparked optimism for increased consolidation in the sector, with shares of Bouygues and other French telecom operators rising following the announcement. Despite this, Dreyfuss stated in his memo, “We confirm that we received an indicative offer last night for part of Altice France’s assets. This offer has been immediately rejected.”

Following the rejection, Bouygues acknowledged Altice’s decision. Meanwhile, Iliad and Orange did not provide immediate comments on the situation. Earlier, French Finance Minister Roland Lescure expressed the government’s intention to monitor the deal closely, emphasizing the need to protect consumer interests. In an interview on 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.”

Market Reactions and Regulatory Implications

While shares of Bouygues initially surged, they experienced a slight decline, closing up 8 percent by 09:25 GMT. In contrast, Orange’s shares rose by 3 percent. This optimism extended to the broader market, with the benchmark CAC 40 index gaining over 2 percent. The response from investors highlights the significance of potential mergers in the telecom sector, particularly regarding SFR, which ranks as France’s second-largest telecom provider, boasting over 19 million mobile subscribers and 6.1 million fiber customers as of June.

France currently operates with four mobile network providers: Orange, Bouygues, Iliad’s Free, and SFR. A merger that would reduce this number to three would require regulatory approval from both European and French authorities. The European Commission previously approved a merger in Spain under similar conditions last year, albeit with stipulations aimed at maintaining competition in the market.

French antitrust chief Benoit Coeure indicated in July that any proposed deal involving SFR would be evaluated carefully. He noted that the regulator would approach the examination “without prejudice,” while still acknowledging potential challenges. Analysts at J.P. Morgan highlighted that the €17 billion bid was better than expected, suggesting that a successful deal might lead to further consolidation across European markets.

Future of SFR and Market Dynamics

Should a deal for SFR materialize, it could set off a chain reaction of consolidation efforts in various markets. Analyst Giorgio Tavolini from Italian brokerage firm Intermonte suggested that Iliad might consider divesting its operations in Italy, where it struggles to generate profits after accounting for spectrum costs. Tavolini remarked, “It would make sense for the group to leave Italy to focus its resources on the French market.”

As the telecom landscape in Europe continues to evolve, the rejection of this bid serves as a reminder of the complexities involved in consolidation efforts. With regulatory bodies closely monitoring the situation, the future remains uncertain for both Altice France and the broader telecommunications sector.