Bouygues and Altice table bids for Vivendi’s SFR cellular unit

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Marie Mawad and Francois de Beaupuy Paris

Bouygues, the French construction and telecommunications group led by Martin Bouygues, has offered e10.5 billion (R154bn) in cash for Vivendi’s SFR unit, setting up a bidding war with billionaire Patrick Drahi and potentially creating a phone carrier to rival Orange.

Bouygues said its offer, which included assets at the Bouygues Telecom unit and was fully backed by financing from HSBC Holdings, would generate additional revenue and cost savings of about e10bn.

A separate proposal by Altice, Drahi’s cable operator holding company, valued SFR at about $20 billion (R213bn) through a mixture of debt, cash and equity, people familiar with the matter said.

If Vivendi accepts either bid, it would have to scrap a plan to distribute SFR stock to shareholders. A disposal of France’s second-largest cellular operator, which Vivendi took full control of in 2011, would represent a shift towards media assets including Canal+ and Universal Music Group under Vincent Bollore, who is set to replace Jean-Rene Fourtou as Vivendi chairman this year.

“I’d be sceptical if Bouygues gets their hands on SFR,” said Emeka Obiodu, a telecommunications analyst at Ovum in London. “The market power SFR and Bouygues would have would definitely raise eyebrows with competition authorities.”

Another carrier that could potentially be interested in SFR would be former stakeholder Vodafone Group, which was “awash with cash” after the sale of its Verizon Wireless stake, Obiodu said. Ben Padovan, a spokesman with Vodafone, declined to comment on the speculation.

Vivendi, Europe’s largest media-to-telecommunications group, will have to assess whether any proceeds from a sale would compensate for the political and antitrust risks. SFR joining Bouygues Telecom would create a carrier with more than 21 million contract wireless customers – closing the gap with market leader Orange.

Vivendi’s shares gained 1.2 percent by 11.21am in Paris, while Bouygues jumped 10 percent. Numericable dropped 8.1 percent, andAltice fell 3.3 percent in Amsterdam.

Drahi’s bid included about e11bn in cash, e3bn in Numericable assets and a e750 million capital increase by Altice, a knowledgeable source said.

Bids from Bouygues and Altice, connected with broadband provider Numericable, come after calls for consolidation in an industry that has been battling falling prices since discounter Iliad started offering packages two years ago with its Free brand for as cheap as e2 a month. Iliad, which had also considered a bid for SFR, did not submit an offer by Wednesday’s deadline.

Vivendi said its supervisory board would examine the two binding offers in the best interests of staff and shareholders.

Bouygues’s bid would reduce the number of cellular operators in France from four to three and is likely to involve a lengthy competition review, while Altice’s proposal would probably avoid that because there is little overlap between the landline and wireless assets. – Bloomberg


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