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Orange Mulling Takeover Bid for Bouygues Telecom

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Consolidation in the French mobile market looks closer than ever as Orange is reportedly mulling a bid for smaller rival, Bouygues Telecom.

Citing sources familiar with the matter, Reuters reported that Orange has hired two investment banks to asses a takeover bid for the rival mobile network operator.

No formal decision has been taken by Orange's board of directors yet, but it was said to have been encouraged by preliminary discussions with regulators who were minded to conditionally approve such a deal.

The French regulators are said to be keen to reduce the fierce price competition in the market that has damaged it since the fourth mobile network, Free was launched. That competition has lead to waves of redundancies in the industry as the companies seek to cut costs -- and the French government, which owns 27% of Orange is particularly sensitive to that issue.

As the European regulators are also likely to be involved, Orange is understood to be waiting until decisions are passed on mergers in Spain and Germany before making its decision.

If the EU is favourable, and with likely support from French regulators, then Orange may make a bid.

Bouygues Telecom has been in play as a possible takeover target after it failed in an bid to buy SFR from Vivendi. Although it could operate as a stand-alone company, it's parent company is known to be looking at options to sell or merge the division with another telecoms operator.

Any deal is likely to see Bouygues Telecom renew its offer to sell its spectrum and network to Free, in exchange for the regulatory clearance, so that Free, which currently uses the Orange network where it lacks infrastructure can compete on an equal footing with the larger networks.

Bouygues Telecom is estimated to be worth around USD8.2 billion.

On the web: Reuters

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Tags: orange  bouygues telecom  France