Bouygues-Led Consortium in Talks for Fresh Bid for Drahi's SFR

A consortium led by Bouygues Telecom has entered due diligence with billionaire Patrick Drahi's Altice Group for a potential new bid for its French business after a prior offer was rejected in October. The group, which includes Iliad SA and Orange SA, confirmed Thursday that discussions are ongoing, though no final terms have been reached. The consortium previously offered to buy SFR, France's second-largest mobile carrier, for €17 billion.

The proposed fresh bid is estimated to be around €20 billion, according to a report by BFM cited in the statement. This is significantly below the €30 billion valuation Drahi had sought last year. The new offer would value the company at approximately €21 billion, including debts.

Due diligence for the potential deal began in early January. The companies emphasized that the legal and financial terms remain under negotiation, with no guarantee that a final agreement will be reached.

What Drives the New Offer?

Drahi has been seeking ways to reduce his debt burden, which has grown from a period of aggressive acquisitions. Higher interest rates have made his debt unsustainable, prompting a major financial restructuring last year. This deal would allow him to offload part of his empire while maintaining control.

The consortium includes Bouygues, Iliad, and Orange, three of the largest telecom operators in France. A successful bid would reduce the number of major competitors in the French market from four to three, raising concerns about market concentration among regulators.

Why Is This Deal Significant?

European telecom operators have increasingly argued that consolidation is necessary to remain competitive. Smaller companies lack the scale to invest in next-generation network infrastructure. This deal could represent another step in that consolidation process.

The earlier nonbinding offer valued at €17 billion was rejected in October. At the time, it implied an enterprise value of €21 billion, with Bouygues acquiring 43% of the assets, Iliad 30%, and Orange 27%. The new bid suggests a higher valuation, though still below Drahi's initial target.

What Comes Next?

Any final deal would require regulatory approval, especially given the potential impact on market competition in France. The consortium and Altice have not yet agreed on the specific financial or legal terms of the transaction.

Altice Group did not immediately respond to a request for comment. The consortium has acknowledged that the process may not result in a deal and has emphasized that due diligence is still ongoing.

French telecom operators have previously faced regulatory scrutiny over market concentration. A potential approval would depend on whether the transaction is seen as promoting investment and innovation in the sector, rather than stifling competition.

The potential acquisition would mark another major development in the ongoing restructuring of Altice's French operations. It would also represent a significant shift in the competitive landscape of one of Europe's largest telecommunications markets.

The outcome of these negotiations could have broader implications for the European telecom industry, which is still grappling with the need to consolidate in order to remain globally competitive.