French telecoms firm Altice has confirmed that it has made an offer for smaller rival Bouygues Telecom, via its subsidiary Numericable-SFR.
Shares in both Altice and Bouguyes were up on Monday morning after the statement this morning. Altice was up 19.5 per cent to €137.55, with Bouygues up 13.37 per cent to €38.09.
Altice, founded by billionaire telecoms tycoon Patrick Drahi, is thought to be offering €10bn (£7.1bn) in cash for the whole of Bouygues, which has 11m mobile clients. However, Bouygues owner Martin Bouygues is thought to be pushing for a €11bn valuation, and has previously said he does not want to sell his mobile business.
There is also some personal tension, as Drahi beat Bouygues to buy SFR last year.
If the deal goes through it would bring together France’s second and third placed telecoms companies. Such consolidation is currently a hot topic within Europe.
France’s economy minister Emmanuel Macron reiterated in an interview on Sunday that the time was not right for the French mobile sector to be reduced from four companies to just three.
The consolidation could enable significant cost savings for the combined company. Consequently, the price being offered is double the €5bn at which most analysts have previously valued Bouygues.
Its board will meet tomorrow to look at the offer after reports of the deal emerged in the French newspaper Journal de Dimanche over the weekend.
In an attempt to avoid competition issues, billionaire Drahi has made a deal with Iliad. This would entail the low cost provider buying large parts of Bouygues’ mobile spectrum and towers. Additionally, market leader Orange could take on several hundreds of Bouygues Telecom staff.
France is soon going to be holding an auction for the 4G mobile spectrum. Francois Hollande’s government is encouraging operators to invest in fibre broadband.
The move comes after various other acquisitions made by Altice. Over the last 18 months the firm has bought US cable company Suddenlink and Portugal Telecom, as well as SFR.