European Telecom Altice Offers to Buy French Rival Bouygues

Deal would reduce France’s mobile operators to three and face stiff regulatory hurdles 

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PARIS—European telecommunications firm Altice SA has made an offer of around €10 billion ($11.4 billion) to buy French mobile operator Bouygues Telecom, according to a person familiar with the matter, in a deal that would face stiff regulatory hurdles in France as it would reduce the country’s number of mobile operators from four to three.

Altice, controlled by French cable magnate Patrick Drahi, made an offer to buy Bouygues Telecom about 10 days ago, which would include merging the unit with Altice’s French operations, called Numericable-SFR, the person said. 

Parent company BouyguesSA will consider the offer this week, but it is unclear if Bouygues Chairman Martin Bouygues, who controls the firm, will accept, the person added. 

The offer thrusts Mr. Drahi again into center stage in France’s fractious telecommunications industry, just over a year after he beat out Mr. Bouygues in a takeover battle to purchase Vivendi SA’s SFR. The French government has in recent months said it would oppose deals that reduced the number of mobile operators in the country. 

On Sunday, French Economy Minister Emmanuel Macron fired a warning shot against the deal, saying that companies should be focusing on investment and jobs, not mergers. 

“The consequences of consolidation are negative in these respects, as several recent cases in Europe have proven,” Mr. Macron said. “The time isn’t right for opportunistic mergers that could benefit some but aren’t in the public interest.”

To address potential antitrust concerns, Mr. Drahi has struck a side-deal with Iliad SA, owner of another mobile operator in France called Free Mobile, to purchase parts of Bouygues’ telecoms network, the person said. 

Since the arrival of Iliad’s Free Mobile in early 2012 set off a price war, French telecommunications firms have complained that their market is too competitive. But the country’s competition watchdog has said it would be wary of such deals. 

Mr. Drahi’s Altice has been keen on a Bouygues purchase for some time, according to executives, because it would shrink the number of mobile carriers in France to three from four. But Bouygues has appeared unwilling to sell.

French newspaper JDD first reported the news of Mr. Drahi’s bid on Sunday.

France and Germany have told Greece it must have an agreement on economic reform measures with the trio of bailout monitors finalised and delivered before a crucial leaders’ summit between Athens and its creditors on Monday.

With the Greek cabinet meeting on Sunday to consider compromise proposals, François Hollande and Angela Merkel both telephoned Alexis Tsipras, the prime minister, to remind him he needed a “staff level” agreement with the European Commission, IMF and ECB ahead of the summit.

They told him the summit was not for “negotiations” — which anyway would be all but impossible in a forum including all 19 eurozone members — and urged him to reach a deal with the institutions. EU officials and bankers have warned that the failure to reach a deal on Monday could lead to a Greek default on its debts and even force its exit from the eurozone.

If a deal is reached, the two leaders said the parties could then start discussing a third bailout at the summit. France is believed to be open to discussing debt restructuring for Athens, a top priority for Mr Tsipras, whose radical leftwing government won office in January setting Greece on a collision course with its creditors.

The Greek cabinet was summoned to a meeting at Mr Tsipras’ Maximos Mansion residence on Sunday morning for a last-ditch meeting to hash out the government’s strategy.

Ministers are expected to discuss how Mr Tsipras can bridge his two seemingly intractable electoral mandates: to end austerity and block further cuts in spending while also satisfying creditors’ demands for reform to keep Greece in the eurozone.

The summit was called after Thursday night’s failure of eurozone finance ministers’ meeting in Luxembourg to cut a deal that would unlock €7.2bn in bailout funds Athens needs to pay the International Monetary Fund by the end of June or face default. 

Minister of State Nikos Pappas used an interview on Saturday with the country’s Ethnos newspaper to reiterate the government’s firm opposition to cuts to pension plans or wages.

Yanis Varoufakis, Greece’s finance minister, writing in German daily Frankfurter Allgemeine Zeitung, has said German chancellor Angela Merkel faces “a stark choice” ahead of the crucial summit of European leaders in Brussels on Monday. 

Ms Merkel could enter into “an honourable agreement with a government that opposes bailouts” and wants “a negotiated solution that ends the Greek crisis once and for all”. The second option was to “heed the sirens” from her government, which he said were “encouraging her to jettison the only Greek government that is principled and which can carry the Greek people along the path of genuine reform.” 

Mr Varoufakis said the Greek government would come to Brussels on Monday willing to compromise. but it would only compromise as long as the Syriza-led government was not asked to take on new loans “under conditions that offer little hope that Greece can pay back its debts”.

“The choice, I am very much afraid, is hers,” he said.

In a sign of the growing anxiety in Greece, savers withdrew more than €1.6bn in deposits on Friday, according to two banking sources, the largest withdrawal in one day since Greece’s left-wing government took office in January. More than €6bn have left the system this week, and bankers fear the withdrawals could speed up when the banks reopen on Monday.

Syriza supporters will rally in front of Parliament on Sunday evening to urge the government not to give in to creditors’ demands. 

Over the weekend Jeroen Dijsselbloem, Dutch finance minister, who chairs meetings of his eurozone peers, brought the meeting forward by two-and-a-half hours.

Giving no explanation for the earlier start, Mr Dijsselbloem said ministers would convene in Brussels at 12.30pm on Monday. Angela Merkel, German chancellor, and other eurozone leaders are due to sit down with Mr Tsipras in the same venue at 7pm.

Underlining international concern that a Greek default could ripple across the world economy, US Treasury Secretary Jack Lew said it was up to Greece to make concessions.

“What we know is the best solution is for Greece to make some tough decisions and for this to be worked out,” he told CNN television.

“Within Greece, the consequence of a failure here would mean a terrible, terrible decline in their economic performance.” 

The European Central Bank threw a slender lifeline to Greece’s troubled banking system on Friday, as the run on the country’s lenders accelerated ahead of a crucial leaders’ summit between Athens and its creditors on Monday.

The ECB agreed to raise the amount of emergency liquidity assistance available to Greek banks by around €1.75bn to €85.9bn on Friday, according to two people familiar with the matter, to allow lenders to pay back depositors.

Chipmaker Advanced Micro Devices Inc is at the initial stage of reviewing whether to split itself in two or spin off a business, seeking to reverse its fortunes and take on rival Intel Corp, according to three people familiar with the matter.

The deliberations are preliminary and no decision has been made, the people said. The review highlights Chief Executive Lisa Su's determination to consider every possible option to turn the company around.

AMD, based in Sunnyvale, California, has asked a consulting firm to help it review its options and draw up scenarios on how a break-up or spin-off would work, the people said this week, asking not to be identified because the deliberations are confidential.One option under consideration is separating AMD's graphics and licensing business from its server business, which sells processors that power data centers, one of the people said.

AMD had explored such a move in the past and decided against it, the people said. Su, however, who took over as CEO last October, judged that there is merit for the company to at least consider such a possibility again, the people added. There is no certainty that a split or spin-off will occur, the people cautioned.

An AMD spokeswoman said no such project was in the works at this time and reiterated the company's commitment to the long-term strategy it laid out in May at its analyst meeting.

AMD, which has a market capitalization of around $2 billion, has competed with much larger Intel since the 1980s, and at times has made inroads with its PC and server chips. AMD has an extensive cross-licensing agreement with Intel, an issue AMD would have to study carefully in the case of a break-up.

In the last few years, AMD has been caught somewhat flat-footed by new competitors designing low-cost and power-efficient chips. AMD shares have fallen 40 percent over the last 12 months.

The company, which said in October it would cut 7 percent of its workforce, is now shifting its focus to gaming consoles and low-power servers to combat falling laptop sales.

While large rivals such as Intel have deeper pockets to fund research on new products, AMD faces declining cash flows and has a more modest balance sheet.

AMD's net loss widened to $180 million, or 23 cents per share, in the quarter that ended March 28, from $20 million, or 3 cents per share, a year earlier. It also missed on revenue expectations. It is forecasting a return to profitability in the second half of the year.