Altice sets sights on Bouygues Telecom

Altice, the European cable group controlled by billionaire Patrick Drahi, says it wants to acquire Bouygues Telecom, insisting that it is the "most interested buyer" of France's third-biggest mobile operator.

Forecasting another wave of consolidation in one of Europe's most competitive markets, Altice chief executive Dexter Goei said that he saw a "big synergy potential" in combining the operator with Altice's telecoms assets in France.

As the controlling shareholder of French cable group Numericable, Altice has been investing heavily in France and in April agreed to buy a majority stake in SFR from Vivendi, the Paris-based media and entertainment group.

But the €17bn deal for SFR, the country's second-largest mobile operator by subscribers, failed to reduce the number of competitors in the market from four to three, potentially prolonging a two-year price war that has forced operators to slash costs.

Speaking at the Morgan Stanley conference in Barcelona on Thursday, Mr Goei forecast that there would be an effort as soon as next year to consolidate the French market.

Referring to Bouygues Telecom, which has suffered most in the price war, Mr Goei said: "We view ourselves as the most natural buyer . . . if we get a call from Bouygues then why not? I would be surprised if there was not some effort in 2015 to get something done."

On Thursday, Bouygues left open the possibility of consolidation. While stressing that it was following a standalone policy, it said "we remain attentive to the French telecom evolution and to any potential opportunity".

Mr Goei's comments follow an intense few months following the Altice-SFR deal in which all four mobile operators in France were discussing options that would lead to consolidation.

But in July, any immediate hope for a reduction in operators faded after Orange, the country's largest operator, rejected "for now" any such possibilities.

More recently, Xavier Niel, ruled out any possibility that his Iliad telecoms group would reach a deal with Bouygues. "The market's consolidation cannot happen without us so there will be no consolidation," Mr Niel said.

Mr Goei said that Altice was in a position to fund any such transaction given the size of the synergies on offer, in spite of analyst questions about its level of debt after a spate of deals to acquire Numericable, SFR and Orange's operations in the Dominican Republic.

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Altice is also bidding to acquire the Portuguese assets from Oi, the Brazilian group, which could cost up to €7bn. "The balance sheet can definitely take another large transaction," he said.

Mr Goei's comments on France were supported at the conference by Orange chief executive Stephane Richard, who said there was a "medium to long-term need for consolidation".

Mr Richard said that Orange was unlikely to be the "front player" in any transaction, but would "contribute positively" if there was a deal put forward in which it could take part.

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