Yahoo Finance Bouygues Hangs Up but Line Open for French Telco Merger -- The Short Answer
Has Bouygues Left the Deal-Making Door Open?
Yes, reckons brokerage house Natixis. Martin Bouygues, whose family controls the eponymous group, said Patrick Drahi, the cable magnate who owns Numericable-SFR through his Altice investment company, couldn’t have had financing ready for the bid which would require antitrust remedies to go through. That’s not a “categoric” rejection, say Natixis’s analysts. “[It] leaves the door open for a higher offer without conditions linked to competition issues.”
Can France Buck the European Telecom Trend?
No, says brokerage house Kepler Cheuvreux, as consolidation continues across the region. “We note that an increasing number of European countries now have three-player markets,” say Kepler Cheuvreux analysts. Germany is one. The U.K. should soon be another. “On the execution, we all agree it would take a while [12 to 18 months] to get approval from regulatory authorities. However, we don’t see why the French market wouldn’t return to three operators,” say analysts at Dutch bank ING.
How Vehement is the French Government's Opposition?
Not perhaps as strong as it looks. Senior French ministers talked tough when news broke at the weekend of Drahi’s approach to Bouygues, concerned about the risk to jobs implicit in the debt-financed and highly priced bid for Bougyues Telecom . But analysts at Oddo Securities note the comment by Economics Minister Emmanuel Macron who said there is “no religion” in whether France should have three or four telecom operators.
Do Local Market Conditions Favor a Deal?
Yes, say analysts at Exane BNP Paribas, suggesting that a year from now either Bouygues or Numéricable-SFR will be under pressure to reconsider the tie-up. Bouygues Telecom is currently unprofitable. Altice’s ambitious expansion plans depend on maximizing cash generation to support its debt-loaded balance sheet. Investment costs remain high and competition remains fierce in France as former monopoly Orange, upstart no-frills operator Free Mobile compete with Bouygues and Numéricable-SFR for market share.
