Bouygues talks to Illiad to smooth move on Vivendi’s SFR

Bouygues, seeking to pre-empt antitrust concerns over its proposed wireless merger with Vivendi's SFR, is in talks to sell spectrum and its network to Iliad for as much as €1.8 billion.

An agreement is subject to Bouygues winning SFR, and the talks will allow Bouygues Telecom to make its case to France’s competition authority “from the outset with measures designed to maintain a competitive market for the benefit of consumers”, Bouygues said yesterday.

Iliad, the discount mobile-service provider under the Free brand, will finance any deal with existing resources and debt, without the need to raise capital.

The talks signal the construction-to-media conglomerate led by Martin Bouygues is making a push to avoid a lengthy regulatory review of a deal to create a carrier with more than 21 million subscribers to rival Orange.

Bouygues and Altice have begun informal meetings with French officials as each side seeks to convince Vivendi to choose its bid for SFR, France's second-largest phone company, people familiar with the talks said.

"Politicians in France simply can't make a choice other than Bouygues for SFR after they spent all this time criticising fiscal exile, saying there's too much competition in French telcos and worrying about jobs," Iliad founder Xavier Niel said at a press briefing in Paris today. "The Bouygues scenario checks all the items on that list."

Bouygues, bidding against Altice and its Numericable unit for SFR, said last week its offer – €10.5 billion in cash plus wireless assets – values SFR at €14.5 billion, before synergies with its own Bouygues Telecom unit. Altice's proposal also values SFR at about the same and includes a mixture of debt, cash and equity, people familiar with the matter have said.

Iliad jumped 11 per cent to close at €210 in Paris, taking its gains this year to 41 per cent and valuing the company at €12.1 billion. – ( Bloomberg )