French telecom bid: Orange, Bouygues, and Free offer €17bn for SFR

The French telecom market may soon by dominated by three companies instead of four, as Orange, Bouygues Telecom, and Free join forces to buy fourth competitor SFR.

On Tuesday evening, the three groups announced their intention to jointly acquire a range of activities from the Altice Group in France.

The offer includes most of SFR's assets, but notably excludes stakes in Intelcia, UltraEdge, XP Fibre, and Altice Technical Services, as well as Altice's activities in French overseas departments and regions.

SFR is the second-largest telecom operator in France, serving 26 million clients. It is owned by the Altice Group, whose value is estimated at €21 billion, based on the €17bn price offered for its telecom branch.

The Altice Group is a privately held company that is battling high debt, forcing it to restructure its finances. Before Tuesday's announcement, many speculated that it could sell its French telecoms unit SFR to cut some of its debt.

Should the offer go through, the SFR brand is expected to disappear.

While consolidation of the French market ignites anti-competition concerns, those pushing for bigger companies stress that the move could support digitisation if the remaining firms have more funding for infrastructure upgrades.

According to Bouygues Telecom, Free-Iliad Group and Orange, the acquisition would make it possible to "step up investments in superfast network resilience, in cyber security and in new technologies such as artificial intelligence".

Their statement added that the deal would also "consolidate control over strategic infrastructure in France".

The proposed division of the purchase price would be roughly 43% for Bouygues Telecom, 30% for Free-Iliad Group, and 27% for Orange.

The news, while not entirely unexpected, sent Orange SA’s shares up almost 3% in morning trading in Paris, and Bouygues SA’s shares jumped close to 8%. Free’s parent company, Iliad, is privately held.