French telecoms stocks soar amid takeover talk

AFP, PARIS: Shares in leading French telecoms operators soared yesterday, as one of the top players officially launched a takeover bid for a rival that would profoundly shake the sector.
The Altice group, owned by acquisition-hungry Franco-Israeli tycoon Patrick Drahi, announced an offer for Bouygues Telecom thought to be around 10 billion euros ($11.3 billion).
Bouygues Telecom confirmed it had received the “unsolicited” offer and said it would hold a meeting of its board
on Tuesday to discuss the takeover bid. “There is no negotiation underway,” stressed Bouygues. Neither
company disclosed the actual value of the takeover offer.
But traders were jubilant at the prospect of consolidation in the French telecoms market and rushed to buy stock in both companies.
At the opening bell, Numericable-SFR, a subsidiary of the parent group Altice, was up more than 13 per cent while Bouygues was trading more than 14 per cent higher.
Another player, Iliad—which owns operator Free—was also up by more than 10 per cent.
The main French stock index, the CAC 40, was also in the black, up nearly three per cent on optimism a deal could be found over Greece.
Altice said in its statement that it would likely resell some of the assets to Iliad/Free if the deal went ahead.
According to the Journal de Dimanche weekly, which broke news of the possible tie-up on Sunday, Free would get some of Bouygues’s mobile frequency, antennas and shops, while some of its employees may end up at market leader Orange.
However, the French government immediately came out against the deal, with Economy Minister Emmanuel Macron saying: “Consolidation is currently undesirable for the sector.”
“Now is not the time for opportunistic tie-ups which may be of interest to some people but which are not in the public interest,” Macron told AFP.
“Jobs, investment and better customer service are the priority,” added Macron, who noted that recent cases in Europe had shown telecoms mergers to have a “negative” impact. Finance Minister Michel Sapin also advised the players to take into account “the general interest.”
“If this is just to consolidate and raise all the prices, I don’t think anyone will win out,” he told French radio RFI.
“These are big deals between big French companies... in an area that is absolutely fundamental in daily life but also for the economic development of our country,” noted Sapin.
“Therefore, by definition, the state is interested and should give its opinion,” stressed Sapin. In addition, Sapin said he was concerned about the financing of the deal—reportedly via a loan from top bank BNP Paribas—given that Drahi has already piled up debt of around 30 billion euros with a frenzy of acquisitions. “We have to pay attention that this empire is not built on the sands of debt,” said Sapin.
Analysts at Aurel BGC financial consultancy said that the strategy of offloading some of the assets to Iliad/Free might be to ease concerns over competition.
“Over and beyond the question of financing—very important for a group that is already in heavy debt—Altice and Numericable-SFR will have to convince the competition authorities but also the government,” Aurel BGC said.
If the deal goes ahead, it will push Numericable-SFR above Orange and bring the French telecoms sector more into line with the majority of European markets, which are consolidating from four top players to three, the analysts said.  

French telecoms stocks soar amid takeover talk

AFP, PARIS: Shares in leading French telecoms operators soared yesterday, as one of the top players officially launched a takeover bid for a rival that would profoundly shake the sector. The Altice group, owned by acquisition-hungry Franco-Israeli tycoon Patrick Drahi, announced an offer for Bouygues Telecom thought to be around 10 billion euros ($11.3 billion). Bouygues Telecom confirmed it had received the unsolicited offer and said it would hold a meeting of its board on Tuesday to discuss the takeover bid. There is no negotiation underway, stressed Bouygues. Neither company disclosed the actual value of the takeover offer. But traders were jubilant at the prospect of consolidation in the French telecoms market and rushed to buy stock in both companies. At the opening bell, Numericable-SFR, a subsidiary of the parent group Altice, was up more than 13 per cent while Bouygues was trading more than 14 per cent higher. Another player, Iliadwhich owns operator Freewas also up by more than 10 per cent. The main French stock index, the CAC 40, was also in the black, up nearly three per cent on optimism a deal could be found over Greece. Altice said in its statement that it would likely resell some of the assets to Iliad/Free if the deal went ahead. According to the Journal de Dimanche weekly, which broke news of the possible tie-up on Sunday, Free would get some of Bouyguess mobile frequency, antennas and shops, while some of its employees may end up at market leader Orange. However, the French government immediately came out against the deal, with Economy Minister Emmanuel Macron saying: Consolidation is currently undesirable for the sector. Now is not the time for opportunistic tie-ups which may be of interest to some people but which are not in the public interest, Macron told AFP. Jobs, investment and better customer service are the priority, added Macron, who noted that recent cases in Europe had shown telecoms mergers to have a negative impact. Finance Minister Michel Sapin also advised the players to take into account the general interest. If this is just to consolidate and raise all the prices, I dont think anyone will win out, he told French radio RFI. These are big deals between big French companies... in an area that is absolutely fundamental in daily life but also for the economic development of our country, noted Sapin. Therefore, by definition, the state is interested and should give its opinion, stressed Sapin. In addition, Sapin said he was concerned about the financing of the dealreportedly via a loan from top bank BNP Paribasgiven that Drahi has already piled up debt of around 30 billion euros with a frenzy of acquisitions. We have to pay attention that this empire is not built on the sands of debt, said Sapin. Analysts at Aurel BGC financial consultancy said that the strategy of offloading some of the assets to Iliad/Free might be to ease concerns over competition. Over and beyond the question of financingvery important for a group that is already in heavy debtAltice and Numericable-SFR will have to convince the competition authorities but also the government, Aurel BGC said. If the deal goes ahead, it will push Numericable-SFR above Orange and bring the French telecoms sector more into line with the majority of European markets, which are consolidating from four top players to three, the analysts said.