So close … Orange and Bouygues Telecom is therefore not marry. It is a new failure in the attempt to redial the French telecom sector. There are two years already, the two operators had thought to approach a few weeks after a first approach to Free. The negotiation was then stalled on the price charged by the construction group to its subsidiary (approximately EUR 8 billion). A year later, Patrick Drahi SFR and trying their luck with a bid 10 billion. A whopping check that the construction group has decided not to cash. Four attempts, four failures. This is to ask whether the consolidation will one day be possible in this sector.
Yet the planets had never been aligned. For the first time in two years, all the protagonists seemed move in the same direction. Martin Bouygues himself had initiated the sale of its “baby” in Orange. On one condition: that’s 10 billion, or nothing. Intransigence that has discouraged many. The deal was also unprecedented complexity: it does not concern two actors but four. The repurchase Bouygues Telecom required that assets (antennas, frequencies, customers, shops) are sold to Free and SFR, so that the transaction is validated by the Competition Authority. But the different parties appeared, the price of endless negotiations, be able to reach an agreement.
The French telecoms are not any industry
How could it be otherwise when the scenario of a passage from four to three operators running through the head of everyone for two years? Of course, the presence of the State, the main shareholder of Orange, in the midst of discussions did not help things. Bouygues to its requirements in terms of governance were rough. But again, it seemed possible to find a compromise. In the final stretch, as in any financial transaction of great magnitude, everything would settle, and small blockages would necessarily be resolved. It did not happen.
For the French telecoms are not any industry, and its leaders are not any men. Three of them are entrepreneurs French top flight: Martin Bouygues, and Patrick Drahi Xavier Niel. This implies a visceral connection to their company, and particularly developed egos … Telecom, a French passion? It’s a bit … it hates Martin Bouygues Patrick Drahi and Xavier Niel. Following a dispute, Xavier Niel has vowed not to talk to Patrick Drahi for ten years. He still has a few years to be served. Incredible as it may seem, none of the three have met throughout the negotiations!
Testosterone
Finally, if Orange has been at the center of the game, not because the merger with Bouygues Telecom was of an industrial sense. This is primarily because the three others are unable to speak. Many say that the enmity and mistrust between the protagonists did not facilitate the discussions, far from it. Everyone knows also that a marriage between Free and Bouygues Telecom or between SFR and Bouygues Telecom, would have had much more meaning. But as explained early January Scientific journal “Nature”, based on a study by the National Research Foundation, “ testosterone causes looking for a good social status, even if it causes economic decisions disadvantageous . “
this is how it has arrived in France to this unprecedented situation where the leader of telecoms wanted to redeem the” maverick ” of the market. Never seen in Europe, where it is still small operators who married them. If it had occurred, consolidation in the French telecoms would have been a default choice. And Stéphane Richard, a reluctant hero!
And now?
And now? The approach of the presidential elections and the freezing of business life that accompanies it does not advocate new maneuvers in the area. In addition, the interest of the consolidation evaporates over the months. Indeed, the time is not in favor of Bouygues and its subsidiary, which remains the ideal target. Free if was interested in a part of the network of its competitor, it will be less and less to progressively deploying its own antennas.
In addition, pooling current network SFR and Bouygues Telecom complex each day a little more the situation. Despite the loss of more than one million customers in a year, SFR can hope to regain part by focusing on fixed-mobile convergence and the strength of its content offerings, with the support of its parent company Altice. As for Orange, it is precisely the one who least need of this consolidation, even if it would have helped to calm the market and therefore to increase its market value. Altice and Orange should continue their shopping abroad Free and start to develop.
If the French fail to agree among themselves, could a foreign player to invite to the prom? Hard to imagine. The market is one of the most competitive in Europe and cheapest in the world. The only possible value creation through a reduction in the number of players. Bringing a foreign group do not change the situation. And nothing says that Bouygues succeed elsewhere to get a good price for its telecom subsidiary.
Roman Gueugneau and Fabienne Schmitt
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