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Bouygues Boosts Mobile Bid for SFR, in French Turf War

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SFR set to be bought by Bouygues

PARIS, April (AFP) – French telecom group Bouygues stepped up its bid to buy mobile phone operator SFR from Vivendi on Friday, launching a new phase in a huge fight over market positions in France.
Bouygues, which also has big interests in television and construction, raised its cash offer by 1.85 billion euros to 15.0 billion euros ($20.5 billion).
However it lowered the stake Vivendi would get in the entity which would emerge, to 10.0 percent, saying this was worth about 1.0 billion euros.
Friday is the last day of exclusive talks between Vivendi and rival bidder Altice, which owns cable TV-Internet operator Numericable but not a mobile network.
Altice has offered 11.75 billion euros in cash and a 32-percent stake in the new entity.
The fate of SFR, which would have a big impact on the structure of mobile phone services in France against a background of consolidation in European markets, is also sensitive politically.
A takeover of SFR by Bouygues would reduce the number of dominant operators back to three, raising concerns among consumer groups that the benefits of new competition for customers would be eroded.
The launch of low-price services in 2012 by the much smaller new fourth operator Free set in motion upheaval and a price war in the French mobile telecom market which has benefited consumers.
SFR’s incorporation into Numericable would however keep four operators on the market, although strengthening SFR-Numericable’s position as powerful competitor capable of offering customers a complete package of mobile, Internet, television and fixed-line telephone service.
However some experts in the industry have warned that the price war between the operators undermined their ability to invest in ever-faster network infrastructure.
Bouygues said that its project would involve industrial and institutional partners which would invest 2.85 billion euros.
These partners included the Singapore sovereign wealth fund GIC, the Ontario Teachers’ Pension Plan Board, the French luxury products family Pinault, and Reuben Brothers Ltd.
Other investors would be the French insurance giant Axa, the quasi-state savings and investment body Caisse des Depots et Consignations, GIMD controlled by the Dassault industrial family, and advertising display group JC Decaux Holding.
Vivendi, a major media group which owns SFR, entered into exclusive takeover talks with Numericable three weeks ago and which are due to end Friday.
Vivendi is now due to state what it intends to do, either sell SFR to Numericable, enter exclusive talks with Bouygues on the basis of the new offer, or float SFR on the stock market as it had at first considered doing.
– Foreign ownership controversy –
The possibility that SFR could be sold to Altice, a foreign-registered company owned by Frenchman Patrick Drahi who is resident in Switzerland, has generated considerable political controversy.
The French government, which is struggling to bring down its public deficit, has been bluntly critical of citizens who keep their assets in tax havens like Switzerland, Luxembourg or Guernsey.
Arnaud Montebourg, who has been promoted to economy minister in the government reshuffle this week, has publicly attacked Altice’s bid and Drahi himself.
“Mr Drahi will have to repatriate all of his possessions and assets to Paris, to France,” the minister told Europe 1 radio last month.
Bouygues has tried to evoke a possible regulatory problem for Vivendi selling SFR to Altice as the purchase of any company that handles national security secrets by a foreign firm requires preliminary government approval.
Numericable, which is registered in France and is quoted on the Paris stock exchange, already has government contracts.
The scrap over SFR is just a number of deals being done in the European telecoms sector as firms try to ensure they have both mobile and home networks to offer clients one-stop service.
Britain’s Vodafone bought Spanish fibre-optic network operator Ono for 7.2 billion euros, after last year snapping up Kabel Deutschland, Germany’s largest cable operator for 7.7 billion euros.

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