Vivendi enters into exclusive talks with Altice SA for sale of telecoms unit SFR

French media giant Vivendi SA, which is weighing competing offers for its local telecoms unit SFR, has entered into exclusive talks with Altice SA, the holding company of cable giant Numericable Group SA.

Vivendi's preference to Numericable will come as a blow to a rival offer from Bouygues SA, the construction and media conglomerate which operates Bouygues Telecom, France's third-largest mobile operator.

Vivendi must have opted for Altice, the Luxembourg-based investment vehicle founded by French cable king Patrick Drahi, since a sale to Bouygues Telecom would immediately attract antitrust issues, which in turn would take a long time for the deal to go through and slow down its plan of transforming itself into a pure play media company.

Paris-based SFR is the second-largest mobile operators in France by subscribers after Orange SA, while Bouygues Telecom is the third-largest.

The European monopoly regulator will closely scrutinize a Bouygues-SFR merger, since French mobile market would be left with the top two mobile operators having a virtual stranglehold leaving the fourth-largest operator Iliad SA's Free Mobile unit at the mercy of the top two.

''Vivendi's Supervisory Board met today and examined the two offers received from Altice and Bouygues. The Supervisory Board has now decided to enter into exclusive negotiations with Altice for a period of three weeks,'' Vivendi said in a statement.

''It considers their offer to be the most pertinent for the Group's shareholders and employees, with the opportunity for effective execution,'' the statement added.

Vivendi said that Altice's offer includes €11.75 billion ($16.30 billion) in cash and a 32 per cent stake in the company created through the merger of SFR and Numericable.

Bouygues has offered Vivendi €11.3 billion ($15.7 billion) in cash and a 43 percent stake in the merged company, which would be spun off and listed on the stock market after securing regulatory approvals.

In order to ease regulatory concerns, Bouygues had early this month said that it would sell some of its wireless spectrum and transmission network to Free Mobile for around €1.8 billion.

Paris-based SFR provides services for mobile phone, land-line, internet, IP television and mobile internet to more than 21 million customers.

SFR was earlier a joint venture between Vivendi and Vodafone, but in 2011 Vodafone sold its entire stake to the French conglomerate (See: Vivendi, Vodafone in talks over SFR stake sale).

Numericable operates a high speed cable network covering close to 10 million households, providing high definition television, video on demand, high speed internet and telephony services.

It is the first operator in France to have deployed its own fibre network in France, which covers over 8 million households.

A merged SFR-Numericable would have almost 7 million broadband customers and 21 million mobile customers.