TheChek News Flow

DAX:

MDAX:

SDAX:

From a grand historical villa in formal Italian gardens to a 14th-century hilltop hamlet with a deconsecrated church

French telcos explore carve-up of Patrick Drahi’s SFR

Orange, Bouygues and Iliad in talks over deal that would leave France’s telecoms market with only 3 operators

French telecoms operators Orange, Bouygues and Iliad-owned Free are exploring a carve-up of Patrick Drahi’s rival telco SFR, in what would be a landmark deal to consolidate the country’s mobile market.

Dividing up the group, which would probably be led by Bouygues or Iliad, would result in SFR’s assets being split between the companies, according to two people familiar with the matter.

Blackstone, KKR and Ardian are among the investment groups to have recently held preliminary talks over financing options with SFR’s potential suitors, according to people familiar with the talks.

The potential sale of SFR comes as Drahi has been dismantling the telecoms and media empire he built up via a $60bn debt-fuelled acquisition spree a decade ago. As interest rates have risen, the French-Israeli industrialist has refinanced and restructured the company’s debts and sold off assets to appease creditors.

Drahi is now willing to sell SFR and believes that dismantling it in parts is the best option, both to maximise the price and head off competition issues that would arise if any single French rival tried to buy the whole company, according to people familiar with his thinking.

Analysts at New Street Research estimate SFR, France’s second-largest telco, could be worth €21bn.

A sale of SFR has become more likely since its parent company Altice struck a deal with creditors in February to cut its debt pile from €24bn to €15.5bn.

Orange, Bouygues and Iliad have been working on potential deal scenarios since then, such as what product lines or network assets they would each want to buy, said people close to the matter.

Blackstone is understood to have had initial discussions with Bouygues over financing a deal, according to two people familiar with the matter.

No decisions have been made on how to divide the assets, according to four people familiar with the negotiations, who added there was no certainty a deal would be struck.

But cutting the number of French telecom operators to three from four would create billions of euros in synergies and deliver a profit boost for those remaining, so Orange, Iliad and Bouygues are motivated to seek an agreement.

“For a long time, [the companies] were each in the mindset of saying ‘I want to eat the whole cake’ or ‘I don’t want the other guy to eat the cake’,” said one person involved in the talks over SFR. “Now they’re saying ‘We have to share the cake or no one gets cake’.”

If a deal were to be agreed, it would probably come after the completion of the Altice France restructuring, which is expected in October, according to two people familiar with the matter.

A person familiar with Orange’s thinking said the company was looking to maintain its market leadership in any agreement, while also seeking to acquire some mobile customers as part of the deal.

Iliad, Orange, Bouygues, Blackstone, KKR and Ardian declined to comment.

Altice France said it was “focused on implementing the debt agreement, considering the sale of non-core assets, and continuing to relaunch SFR’s commercial operations and improve service quality”.

France’s telecoms companies are hoping a break-up of SFR will be a palatable form of consolidation for EU competition authorities, which have historically been reluctant to allow mergers because of concerns over price rises for consumers.

There have been several previous attempts to consolidate the French market, including in 2016 when a proposed tie-up between Orange and Bouygues fell through.

The EU has been under pressure to permit more telecoms mergers since Mario Draghi’s 2024 report into European competitiveness, which recommended allowing consolidation to create stronger groups better equipped to invest in network infrastructure.

Russell Waller, analyst at New Street Research, said any deal for SFR had three hurdles: a willing seller, price and regulatory concerns. Waller believes all three could now be cleared.

“Paris will lobby very hard to get the outcome it wants, but ultimately Brussels will have the final decision [on approval],” Waller said.

The French government has said it will monitor any sale of SFR closely given the risk of price increases for consumers, as well as the strategic nature of the telecoms sector. The state is also the largest shareholder in Orange and will have a significant role in how any deal is structured.

Industry minister Marc Ferracci said in a recent interview with CNews that the government would be “concerned” if a foreign buyer approached SFR because of “sovereignty implication”, adding he would be “very vigilant” in reviewing such a case.

Strong trade data come ahead of second-quarter GDP growth that is expected to cheer Beijing

Chinese exports rose 5.8 per cent year on year in dollar terms in June, beating expectations as companies used a tariff truce with the US to ship goods ahead of an August deadline for a more definitive deal. 

The strong trade figures released on Monday came ahead of this week’s GDP data for the second quarter that is also expected to please Beijing, as policymakers seek to stimulate a weak domestic economy while navigating geopolitical turmoil. 

But the first-half trade data could sway the Trump administration to tighten its tariff noose on China and the south-east Asian countries that it accuses of permitting transshipment, or rerouting Chinese goods to the US. 

China’s June export growth beat a 5 per cent rise predicted by analysts in a Reuters poll as well as 4.8 per cent growth in May.

Imports last month rose 1.1 per cent on a year earlier in dollars, less strong than analysts’ forecasts of 1.3 per cent but reversing a 3.4 per cent decline in May and marking the first expansion since December.

Chinese President Xi Jinping’s government has depended on exports to boost GDP growth at a time when domestic consumption has lagged amid a prolonged property sector slowdown.

Beijing has also invested heavily in manufacturing to try to meet its GDP target for this year of about 5 per cent. Analysts are forecasting that China will report second-quarter GDP growth on Tuesday in excess of that target, at about 5.1 per cent year on year.

China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 0.2 per cent on Monday while the renminbi was flat at Rmb7.17 per dollar.

While Beijing did not immediately release dollar-denominated figures for trade with individual countries, exports to the US fell 9.9 per cent year on year in renminbi terms between January and June, while its imports declined 7.7 per cent.

Exports to EU, meanwhile, rose 7.9 per cent in the first half of the year in renminbi terms while imports dropped 4.8 per cent.

The rise comes ahead of a summit next week in Beijing between European Commission President Ursula von der Leyen and President Xi at which the bloc is expected to express its concern about the diversion of Chinese products to its markets.

Exports to countries in the Association of Southeast Asian Nations, which the US accuses of transshipment of Chinese exports, rose 14.3 per cent, while imports increased 2.3 per cent in the first half.

Exports to Russia dropped 7.4 per cent over the same term, while imports decreased 8.6 per cent.

Yuhan Zhang, principal economist at The Conference Board’s China Center, said China’s overall first-half trade surplus was driven by weak imports and resilient exports.

“Exports of robots have increased significantly, indicating China’s robust domestic industrial policies in advanced manufacturing, its strategy of diversifying export markets, and the global technology trend and external demand,” Zhang said.

He added that China was diversifying its trade geographically, boosting exports to south-east Asia, Africa, central Asia and the EU while shipments to the US declined.

“Tariffs and geopolitical tensions will likely be a drag by late 2025 unless offset by new stimulus and diversification,” he said.

UK chancellor delivers Mansion House speech, Fed issues Beige Book and China releases second-quarter GDP data

Wall Street takes centre stage, as a string of US financial institutions post second-quarter earnings. Bank of New York Mellon, Wells Fargo, Citigroup, BlackRock and JPMorgan are up on Tuesday, followed by Bank of America, Morgan Stanley and Goldman Sachs on Wednesday. Analysts expect a glittering set of reports, buoyed by the weak dollar and broad sanguinity about the likelihood of a global trade war.

US economic fundamentals are wobblier. The Federal Reserve is still in wait-and-see mode, as heightened uncertainty around tariffs looms over its forecasts. Economists will be anticipating the central bank’s Beige Book, publishing on Wednesday, for a clearer picture. US inflation data for June and the next reading in the Michigan consumer sentiment index will help enrich the picture of the state of play on the ground.

China is expected to deliver a second-quarter GDP year-on-year growth figure of more than 5 per cent on increased exports, despite the wave of protectionism washing over the world. Policy stimulus and the truce between Beijing and Washington have helped shield its economy from the worst effects of tariffs.

In Britain, whose economy contracted in May, skies are undoubtedly gloomier. (Although not literally, as the country swelters through its third heatwave of the year.) Chancellor Rachel Reeves will be giving her Mansion House speech on Tuesday, under a cloud of embarrassing fiscal U-turns.

Readers shouldn’t expect her to confront investor anxieties about a wealth tax. Instead, expect some chipper words on shoring up a culture of investing. Inflation data publishing on Thursday, which economists expect to have ticked up to 3.5 per cent, just might burst her bubble.

Whither Donald Trump? I’ve buried mention of the US president in this newsletter because — to quote our trade guru Alan Beattie — nobody knows anything. The White House will continue to pressure US trading partners into inking trade deals. But after extending the “liberation day” tariff deadline until August 1, its threats are losing credibility. Retaliation from the countries hit with new levies and hand-wringing from international bodies is probably on the menu. I’ll have a taco to go, please.

Aside from the banks, company reports are thin on the ground as we crawl into the dog days. One theme though is pharmaceuticals, with Johnson & Johnson and Novartis posting earnings. Another is the semiconductor industry, with reports from TSMC and ASML.

Key economic and company reports

Here is a more complete list of what to expect in terms of company reports and economic data this week.

Bank of Japan to issue quarterly report on households’ inflation expectations

Argentina: June CPI

China: Q2 GDP

Canada: June CPI

US: June CPI

Results: Aker BP Q2, Ericsson Q2, Tomtom Q2, Bank of New York Mellon Q2, Wells Fargo Q2, Citigroup Q2, JPMorgan Chase Q2, Experian Q1 2026, Barratt Redrow FY trading statement, B&M Q1 trading statement

US: Fed issues the Beige Book

UK: June CPI

Results: Morgan Stanley Q2, Bank of America Q2, Goldman Sachs Q2, Johnson & Johnson Q2, Morgan Stanley Q2, ASML Q2, Richemont Q1, Finnair H1

South Africa hosts two-day G20 meeting of finance ministers and central bank governors

Japan: June monthly trade data, June CPI

Results: TSMC Q2, Volvo Cars Q2, PepsiCo Q2, Marsh McLennan Q2, easyJet Q3, Novartis Q2, GE Aerospace Q2, US Bancorp Q2, Frasers Group FY, Dunelm Q4 and FY

US: Michigan Consumer Sentiment index July

Results: Telenor Q2, Burberry Q1, Danske Bank Q2, Charles Schwab Q2

World events

Finally, here is a rundown of other events and milestones this week.

China-EU Sixth High-Level Environment and Climate Dialogue in Beijing

France: Bastille Day

UK: Bank of England governor Andrew Bailey and Rachel Reeves to speak at Mansion House; environment committee questions Thames Water executives; parliamentary committee questions OBR chair on fiscal risks

US: Arizona holds primary to fill vacant US House seat; Trump expected to speak at Pennsylvania energy summit

Nominations announced for the Emmy awards

China: Four-day International Supply Chain Expo in Beijing begins. Nvidia will take part for the first time, according to state media reports

South Korea: Supreme Court to deliver final verdict on Samsung Electronics chair Jay Y Lee

Federal Reserve: Board governor Adriana Kugler to speak in Washington on housing and the economy; board governor Christopher Waller to speak in New York on the economic outlook

Germany to host immigration ministers at summit on asylum rules

Japan to hold upper house election

Grand final of the Freestyle Chess Grand Slam Tour event in Las Vegas