Patrick Drahi "Numericable will not change its offer SFR"
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Numéricâble boss defends his proposed takeover of SFR while the government, through Arnaud Montebourg, the Minister of Productive Recovery, said he was in favor of Bouygues who promised to sell its network of mobile antennas Free to if selected as the buyer of SFR.
Tuesday, you have given three days to Vivendi to choose or reject your bid SFR. Why this very short time?
The AMF has requested that we communicate. We have made a firm offer which expires Friday, and she did not move. I worked there for 7 years. The future of telecommunications is the convergence of fixed and mobile, not the merger of mobile operators in decline, does not know how to make ultra-fast broadband.
On what is your industrial project with SFR?
Our project is very clear, it is the result of a long reflection, not just two weeks. It is based on technology and simplicity. The technology is complementary fixed and mobile networks. This is a real trend underway in the telecom industry, the sense of history and not just a Franco-French vision of the sector. With the explosion of data and usage, mobile networks need to densify. Convergent offers will become indispensable. By combining our network with the commercial power of a brand as SFR, we will be able to recruit nearly five million customers in four years. The development of fiber for business is another strong point of our project, because we will become the number two market firms with 20% market share.
What is your plan to develop yourself in the mobile in a difficult market where one remains four operators?
SFR is a great company but it suffers from a terrible commercial complexity. There are too many deals and customers are lost. This requires fundamental changes. To achieve this, we must be courageous. My project is an industrial long-term project, and my ambition is to provide a quality service to clients, at constant prices. This simplification of the offer will save a lot of money, especially at the computer. Currently, SFR spends nearly € 400 million in IT each year. For comparison, this is 20 million in Numericable. Our project is also fully compatible with a increase from 4 to 3 mobile operators.
Numericable has lost 20% of its market value in a week. That does not worry you to see that the market seems convinced by the offer of SFR Bouygues as yours? Will you raise your offer?
Our offer is not dependent on short-term market fluctuations. True belief will be built when the market will have a full and accurate information, and not just rumors . My offer is made up of € 10.9 billion in cash, plus 32% of the combined entity. It is valid from March 5, I have no reason to change and I have only one word.
You live in Geneva, your company is based in Luxembourg and listed on Amsterdam and personal holdings are in Jersey and Guernsey. Is not it a bit normal that your profile concerned government?
You should make a balance between the insinuations and truth. I lived in Switzerland since 1999, one third of my life since I just celebrated my 50th birthday. I worked for an American cable operator UPC. My boss asked me to open European headquarters in Geneva. I stayed with my wife and 4 children. Then in 2001-2002, I left UPC to create my company Altice. For the first time in my life, I managed to find French capital to develop the cable in this country, with Société Générale and Pechel Industries. They asked me to install the seat of my business in Luxembourg. Incidentally, Société Générale is 30 times his bet in 2005 with us. My holding staff in Guernsey, I created it in 2002 and I had already left France since 1999. All this information is public ever since. I remember that 60% of Bouygues is listed on the stock exchange. Investors are capital are largely pension funds Anglo-Saxon.
Altice is listed in Amsterdam, like many French florets are domiciled or listed: Airbus, Air France, STMicro, Gemalto, Unibail or future Publicis, Omnicom. The government expectations, I answer. My project is an industrial project patriot, a true made in France. Our suppliers - Alcatel, Sagemcom, Technicolor - are not French and Asian. This is a reality for years, not an election promise. Numericable and SFR are French companies, the new entity will have its headquarters, its management, its French quotation and pay taxes in France. I am the president of this new group.
Where do you get the 12 billion euros of synergies promised in your project?
I myself have never officially mentioned this figure because of the confidentiality of discussions. The reconciliation between Numericable and SFR generate more than a billion of synergies cash flow per year. We have more, and most importantly, the ability to create a growth company. In addition, we have the ability to improve service in the fixed, bringing a real added value . Our project is also the guarantee for the government not having to endure further redundancies in this time of crisis. We will maintain all jobs and we create new ones. We will put these commitments into licenses SFR.
Bouygues promises to spend 400 million euros per year in the optical fiber to the home (FTTH) after the merger ...
With € 400 million, you install the maximum taken by 700,000 a year, and yet, if they have had permissions for roads, building, etc.. This means that in three years, they have taken 2 million, it will miss 10 million to implement the plan high speed! In 2006-2007, when all telecom operators have promised to invest in fiber optics, I bet that one company could succeed by 2012: Numericable. Facts have proved me right. I started to pull the fiber in 2005, and today Numericable has more than 5 million eligible households. Free promised 4 million taken in 2007 maturing in 2012. We are in 2014 and Free has only a few thousand. Telcos can not do as much as us. We have taken the lead by investing approximately EUR 2.5 billion in the fiber at Numericable, and before me which companies I bought the network, France Telecom, Caisse des Dépôts, EDF, Générale des Eaux etc., had already put € 6.5 billion since 1978.
Will you deploy the true fiber to the home or the cable highly skewed and limited flow?
My project is very high speed, as desired by the government. We of course respect the commitments already made by SFR. SFR, we will deploy 12 million taken by 2017 and 15 million by 2020. We connect nearly 1 million new homes per year, and SFR will help us to draw two million missing. While so far we only modernize the existing cable network, which covers just under 40% of the population, we can expand beyond our historical footprint. About the capacity of our network, know that we can do 100 Mbps symmetrical with Numericable. There are four years, we have experienced the 1 gigabit per second. We are entrepreneurs, telecom specialists. Our project is the only one capable of fiberize France. Our project is a chance for the French.
It criticizes your offer to sit on a high debt will weaken the new set. What do you say?
Altice is partly financed by debt, like all societies, but its debt level is quite moderate and lower than most cable operators. I hold Altice 75% with my management, because I invested consistently with it. And I never paid any dividends since my philosophy is to reinvest all my profits in the company. I deleveraging my group 0.7 times per year. You realize what this means: I produce 600 million euros in cash flow per year. Bouygues is carrying debt to all Bouygues Telecom, SFR he wants to build, so it takes no risks. I can make a capital increase of € 3 billion, and I 100% guaranteed. In an industrial project, it takes courage and responsibility.
It is said that you have a guaranteed option to use Vivendi half of its stake in the future together with € 1.4 billion, which risks further increasing your debt.
This is false.
There is obviously a matter for consideration in the competition authority on pay-TV, since you are a content provider and Vivendi also via CanalSat ...
Governance of the new entity will be organized so that Vivendi will have shareholder rights consistent with this requirement of the competition authority.
What do you do if your offer is not accepted?
I will continue to develop high-speed broadband in France with Numericable. Growth potential remains any significant way. After that, we should not delude ourselves. A wedding-SFR Bouygues, if it materializes, will not fulfill all the promises that are being made. There will be particularly the case at the social level. I, for my part, I have time and I build and develop my group today 2nd European cable operator.
Arnaud Montebourg sided with the offer of Bouygues. Rumours are rife about your account. Do you have the feeling of being rejected by your compatriots?
Do not expect me to comment on the media and political unrest of recent days. I'm too respectful of the Supervisory Board of Vivendi and the Competition Authority decision that will only end. We managed to build a group that is ten times larger than Numericable in France. I was rolled out the red carpet in all the countries where I have invested, Portugal, Israel, Belgium ... because everywhere, what mattered was the investment, investment and investment I recently ... been very well received in the Dominican Republic, where I bought the Orange subsidiary. Today important in France as elsewhere, is that we have the best industrial project, thoughtful seven years matured, built for years, and not tied in a few days. Our project is clear, simple, reassuring for employees and consumers. At Numericable, there is only passion, this is our business operator and investment in very high speed.