Orange and Bouygues consider merger

16 May 2014 | Kavit Majithia


French market leader Orange and rival operator Bouygues are reportedly looking at options to merge after calls from the country’s government for further consolidation in the market.

Economy minister Arnaud Montebourg told parliament this week that France will become a three-player telecoms market in the future.

Orange is reportedly wary of the potential risks of pushing such a deal through, which could face anti-trust concerns, while Bouygues continues to look for consolidation after losing out to Numericable in a bidding war for mobile operator SFR last month.

“All opportunities are on the table, said Philippe Marien, CFO at Bouygues. “All market operators are looking at hypotheses, opportunities, work-sharing, partnerships and commercial exchanges.”

Stephane Richard, CEO at Orange, and counterpart CEO Martin Bouygues have both suggested the possible tie-up on several occasions, according to French media reports.

Bouygues is valued at approximately €5 billion, while Orange has a market value of €32.5 billion, according to estimates.

France is targeting increased consolidation in telecoms after low-cost operator Iliad began a price war by offering lower tariffs.

The move has distressed earnings across the industry, with many losing jobs.

A combined Orange and Bouygues would create a company consisting of 50% of France’s wireless users, according to Bloomberg.