French telco Bouygues Telecom has entered into exclusive talks with smaller rival Iliad (Free) to sell portions of its network and wireless spectrum for around EUR1.8 billion (USD2.5 billion), in order to secure regulatory approval for the acquisition of Vivendi’s telecoms unit SFR. According to a company press release, the agreement is ‘conditional on the merger [between Bouygues Telecom and SFR] being completed’. The company stated in a press release that ‘the agreement, along with the Bouygues-SFR merger, would help restore a level playing field in the mobile telecoms sector that would boost employment, facilitate investment, as desired by the public authorities, as well as improve quality of service and innovation for the benefit of consumers.’
By setting a side-deal in motion, TeleGeography notes that Bouygues is effectively pre-empting possible regulatory hurdles that may come to the fore. Further, Bouygues’ plan could see it avoid a lengthy review by the Autorite de la Concurrence; Bruno Lasserre, president of the competition regulator, revealed to local media sources that it may take the Autorite de la Concurrence nine months to fully examine the sale of SFR, with the exact timing dependent on the offers.
As previously reported by TeleGeography’s CommsUpdate, earlier this month Vivendi received two competing offers for SFR, one from domestic broadband operator Numericable (owned by Luxembourg-based Altice Group), and one from third-placed cellco Bouygues Telecom. Both suitors valued SFR at around EUR19 billion–EUR20 billion. Numericable tabled a bid which consists of EUR11 billion in cash (comprising EUR8 billion in debt and EUR3 million via a capital increase) and 32% of the new merged entity. For its part, Bouygues Telecom’s proposal comprises EUR10.5 billion in cash and 46% of the share capital of the new entity. Further, Bouygues Telecom promised to stage an initial public offering (IPO) for the new company ‘as soon as possible’, with Vivendi given the opportunity to sell an additional 15% stake in the enlarged company. Vivendi’s board of directors, which comprises of Henri Lachmann (CEO of Schneider Electric), Alexandre de Juniac (CEO of Air France KLM) and Vincent Bollore (CEO of Bollore Group) among others, have eight days to evaluate the offers.