Vivendi's decision to pick Altice as the preferred suitor for its French telecoms unit SFR seems to have sparked off a chain reaction that could ultimately see even greater consolidation in the French telecoms market than had initially been anticipated.
No doubt encouraged by the success of its negotiations with Vivendi, Altice has now confirmed that its French cable unit Numericable has submitted an offer of €325m for the local MVNO Virgin Mobile.
Carphone Warehouse, which owns 46 per cent of Virgin Mobile France's holding company Omer Telecom (also known as OMEA Telecom), along with the rest of Omer Telecom's shareholders, has entered into an exclusivity agreement with Numericable over the proposed sale of the company. The other major shareholder is the UK-based Virgin Group.
If the offer is accepted, Numericable would not only merge with SFR but also swallow up an MVNO that has been a reasonably competitive rival to France's four main mobile network operators, with 1.7 million subscribers as well as an LTE offering.
"This agreement allows the Virgin Mobile brand... to enter into a new phase of its development in France," the company said in a statement.
Yet more developments afoot on the French market: Vivendi's choice of Altice over Bouygues for SFR also put Bouygues Telecom's future as a standalone company into considerable doubt, and caused dismay at government levels.
It's also riled Orange, because a merger between SFR and Numericable would not achieve its hoped-for goal of returning the French market to three mobile network operators, rather than the four that currently operate in the country.
Bouygues Group is reportedly considering how it can save costs to ensure the future survival of its telecoms unit, and unions have told the French press that they fear up to 2,000 jobs cuts could be made at the operator.
Enter Orange as the latest potential candidate to buy Bouygues Telecom: apparently unhappy with a proposal from Iliad to buy the operator for €4bn to €5bn, Martin Bouygues and Orange CEO Stephane Richard have apparently discussed a possible link-up of the two companies on "several" occasions, according to a report in French daily Les Echos.
In fact, it sounds as though France's telecoms operators are pretty much open to anything and are discussing various options to help take the heat out of the competitive environment.
"All scenarios are on the table," Bouygues CFO Philippe Marien said during the company's earnings conference call, Bloomberg reported. "All market operators are looking at hypotheses, opportunities, work sharing, partnerships and commercial exchanges."
For its part, Orange issued an extremely cryptic statement following the Les Echos report: "Orange is assessing the opportunities that the changing landscape in the French telecommunications might offer," the company said. "Orange believes that consolidation of the French mobile market would be positive in the long-term for both investment and for the consumer."
Certainly, Richard has made no secret of the fact that he supports further consolidation in France as well as in Europe, and has criticised the price war that ensued when Iliad launched Free Mobile on the market and introduced sub-€20 plans including 3GB of 3G data. Those plans were quickly followed by a €2 mainly voice and texts tariff, as well as the addition of LTE and 20GB of inclusive LTE data.
The talks between Bouygues and Orange have not been officially confirmed, but such a move would be welcomed by the French government, which also wants to see the market restored to just three operators. Industry minister Arnaud Montebourg has said that having four players is bad for competition and jobs in the French telecoms market.
Richard has been keen to stress that he is under no pressure from the state, telling Les Echos: "No one on the government side has asked me to study the takeover of Bouygues Telecom."
The French state still owns 27 percent of Orange, which also noted in its statement that it "keeps clearly in mind the fact that the group's leadership position allows it complete independence in its decision-making".
Such momentum on the market makes it seems that a reduction in the number of mobile operators from four to three will happen one way or the other, ending what has certainly been a beneficial era for consumers who have seen prices come down dramatically in the French market. For them, the good times could be at an end — or at least prices are unlikely to continue to drop with such rapidity.
At the same time, it's always difficult to predict the next actions of canny entrepreneurs such as Iliad owner Xavier Niel and Altice founder Patrick Drahi. Both have shown a healthy disregard for the French establishment and could well have more surprises up their sleeves.
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