Orange could sell up to EUR 5bn worth of assets as part of EUR 10bn merger with Bouygues Telecom
Orange [EPA:ORA], the French telecoms company, is understood to be considering selling between EUR 4bn and EUR 5bn worth of assets as part of its potential merger with French mobile phone operator Bouygues Telecom, French daily Le Figaro reported.
The unsourced report said that the asset sale would not only reduce the cash that Orange would have to pay but also answer the expected concessions that will likely be required by the relevant competition authorities for the deal to go through. Discussions with potential buyers have already been launched.
The report claimed that Orange could pay around EUR 10bn for Bouygues Telecom, giving vendor Bouygues [EPA:SN] the French conglomerate, between 15% and 20% in Orange. The report added that 15% of Orange is valued at about EUR 8bn, leaving a cash payment of EUR 2bn. According to the report, the French government, which owns a 25% stake in Orange, does not want to see Bouygues owning more than 15% in the company.
Analysts estimated that the assets up for include the mobile network and frequencies of Bouygues Telecom, the entire network of outlets operated by Bouygues Telecom, the enterprise division of Bouygues Telecom, part of the mobile clients of Bouygues Telecom such as low-cost brand B&You, and customers of the Bouygues Telecom’s fixed network.
The fixed customers’ division, which boasts 2.6m clients, is valued at EUR 500m, according to an analyst at Bryan, Garnier & Co.
The low cost brand B&You has 3m customers and is valued at EUR 1bn, another analyst claimed. Numericable SFR and Iliad/Free could be interested in acquiring the asset, the report added.
The entire network of outlets operated by Bouygues Telecom, about 550 shops throughout France, is worth about EUR 100m. The report said that Free and SFR dot not appear to be the best buyers for the business in its entirety.
Parts of the mobile network and frequencies operates by Bouygues Telecom could attract interest from Numericable SFR and Iliad/Free. The report noted that Iliad/Free was willing to pay EUR 1.8bn six months ago for the assets, but an analyst at Bryan, Garnier & Co claimed that, as time goes by, Iliad/free will have less need of the frequencies and network, and the price will therefore go down. The report added that Bouygues Telecom has also signed a mutualisation contract with Numericable SFR about sharing part of their network, a contract that could still remain valid after the merger with Orange.
Finally, the enterprise division of Bouygues Telecom, with 1m clients, is estimated at EUR 1bn, Alternative operator Coriolis has already publicly stated its interest in the business, while the report described Numericable SFR as a “natural” candidate for the unit. The report noted that Orange already has a 55% share of the enterprise market in France.
Le Figaro