Altice to acquire Bouygues Telecom for $11.3 bn

Barely a month after acquiring Portugal Telecom's Portuguese assets, European telecom major Altice SA has made an offer to buy French rival Bouygues Telecom for approximately €10 billion ($11.3 billion), aiming to oust Orange as France's biggest mobile operator.

The transaction will also change the telecom landscape in France by reducing the number of main mobile players from four to three.

Altice, controlled by telecom baron Patrick Drahi, said in a brief statement: ''Altice SA announces that it has made an offer to acquire Bouygues Telecom through Altice's subsidiary, Numericable-SFR.''

The company has not provided any details of its proposal.

Founded by Drahi, Luxembourg-based Altice is a multinational cable and telecommunications company with presence in France, Belgium, Luxembourg, Portugal and Switzerland, Israel, French Caribbean and the Indian Ocean regions and the Dominican Republic.

Numericable-SFR, in which Altice holds 70-per cent stake, is France's second-biggest telecom operator with over 22.5 million mobile customers, while Bouygues Telecom occupies comes third with around 11 million mobile customers.

The company was formed through the combination of Altice's cable arm Numericable and French telecom major SFR, controlled by media giant Vivendi, in a €17-billion deal last November aiming to create a leading telecom player in France. Further to the deal, Vivendi held 20-per cent stake in the combined entity. (See: Vivendi agrees to sell telecom unit SFR to Numericable in an over $23-bn deal)

Bouygues, backed by billionaire Martin Bouygues, was a strong contender for SFR. However, Vivendi had concerns that the deal would be held up by competition authorities, the companies being the second and third largest operators.

Last month, Altice and Numericable-SFR acquired Vivendi's 20-per cent stake in Numericable-SFR.

According to some analysts, Drahi's offer is high compared to the price for Bouygues a year ago, with many of them valuing the firm at around €5 billion.

French economy minister Emmanuel Macron said that the time was not right for consolidation in the telecom sector and the industry should focus on investment, as the government is planning to auction 4G spectrum which would require improved telecom infrastructure.

One source said Reuters that Drahi wanted to move now because of concerns that interest rates could rise in the coming months, making Altice's approach of highly leveraged deals more costly.

It is believed that Bouygues is pressing to increase the price to €11 billion and the company will hold a board meeting this week to review Drahi's offer.

Altice is also planning to buy US cable company Suddenlink Communications. In May, it said that is would buy 70-per cent of the St Louis-based US company for approximately $9.1 billion in a cash-and-debt deal with its existing private equity owners BC Partners.

Drahi also had an eye on US' second-biggest cable operator Time Warner cable, after the latter's $45-billion merger with Comcast collapsed because of regulatory concerns. (See: Time Warner Cables in sell off talks with Altice, Charter)

However, in May, US' fourth-biggest cable operator Charter Communications agreed to acquire Time Warner in a cash-and-stock deal valued at over $78 billion deal including debt. (Charter to acquire Time Warner for $56 bn)