By Gianluca Lo Nostro and Elvira Pollina
April 17 (Reuters) – A sweetened 20.35 billion euro ($24 billion) joint bid by Bouygues Telecom, Iliad-owned Free and Orange for France’s second-largest telecoms operator SFR looks set to test the European Union’s regulatory resolve.
Regulators have long drawn a red line to maintain four operators per country, resisting pressure for consolidation to match more dominant U.S. and Asian competitors.
Each operator acquiring a portion of SFR will face a separate antitrust review, an Orange spokesperson told Reuters.
The three companies submitted their joint offer to buy most of Altice France’s assets on Friday, after their earlier 17 billion euro offer was rejected by SFR parent Altice in October.
A successful deal for SFR, which is backed by billionaire Patrick Drahi, would shake up one of the most competitive telecoms markets in Europe. Operators in France have been locked in price wars for years, pressuring margins and revenue growth.
A European Commission spokesperson said it had not been formally notified of the proposed transaction.
“If a transaction constitutes a merger and has an EU dimension, it is always up to the companies to notify it to the Commission,” the spokesperson added.
WHAT IS AT STAKE?
EU antitrust regulators have imposed tough remedies and outright blocks on telecoms deals that proposed reducing the number of mobile network operators from four to three in a single country market, with a view to safeguarding competition and avoiding price increases.
However, a 2024 EU report on the bloc’s competitiveness urged regulators to ease a stance that had resulted in a highly fragmented sector, and instead focus on helping businesses gain scale and compete with U.S. and Chinese rivals.
This echoed some calls by sector CEOs for the EU to facilitate mergers by assessing deals on a regional rather than national level and to take into account investment plans.
The European Commission has been looking to pan-European deal approvals to help boost scale, Reuters has reported.
WHO WOULD REVIEW AN SFR DEAL?
Acquiring Altice’s French assets would likely face a review by the European Commission, which has 25 working days after a deal is filed for a first-stage review. It may extend by 35 working days, to consider either proposed remedies or a member state’s request to handle the case.
Most mergers win approval, but occasionally the Commission opens a detailed second-stage investigation for up to 90 additional working days, which it may extend to 105 days.
WHAT DOES THE FRENCH GOVERNMENT SAY?
Paris will play a key role in the event of a deal as the French government is Orange’s largest investor.
As a board member, its influence can extend to talks, which could focus on job protection and the national interest.
Finance Minister Roland Lescure has said he will be “extremely vigilant”, particularly on prices and service quality.    Â
WHAT IS THE EXISTING FRENCH TELECOMS LANDSCAPE?
France has four telecoms operators, with Orange the market leader. This means it would only be able to acquire the smallest share of SFR, which has 19 million mobile subscribers and more than 6 million fibre customers.Â
The French market has undergone many transformations, with Orange itself being acquired by France Telecom in 2000.
In 2014, Vivendi sold SFR to Drahi’s Numericable for 13.4 billion euros in cash and a 20% stake in the combined entity, forming Altice France.
Altice closed a debt restructuring last year that left Drahi controlling 55% of Altice France and creditors 45%.
Meanwhile Bouygues Telecom, which is seeking the biggest slice of Altice’s business, has expanded through its acquisition of La Poste Telecom, adding 2.3 million customers in 2024.
Iliad entered the French market in 2012 under its budget brand Free, prompting stiff price competition.
The three carriers have proposed acquiring most of SFR’s activities, except for its stakes in fibre assets and those in French overseas departments and regions.  Â
(Reporting by Gianluca Lo Nostro and Elvira Pollina; Editing by Alexander Smith)
