SFR’s €20bn break-up can win watchdog approval, says Bouygues
Lead bidder for French telecoms operator hopes EU’s competitive drive will offset regulatory concerns about merger
A €20bn deal to break up billionaire Patrick Drahi’s indebted French telecoms operator SFR can win regulatory approval, according to the CEO of lead bidder Bouygues, in a major test of Europe’s drive to increase its competitiveness by allowing more scale.
The consortium led by Bouygues, alongside rivals Orange and Iliad, wants to carve up SFR and reduce the number of telecoms operators in France from four to three — a traditional no-go for European watchdogs.
The operators hope that increased urgency to invigorate the bloc’s economy will favour them and offset regulators’ historical reticence to accept mergers that could lead to higher prices for consumers.
“We think there’s a path to do it . . . two or three years ago, I wouldn’t have said that,” Bouygues chief executive Olivier Roussat told the FT, adding that regulators appeared increasingly willing to question the “dogma” that four operators were needed.
He argued that price wars in France — sparked by Drahi to pressure rivals into a deal — had sapped operators’ ability to invest in upgrading networks, making consolidation imperative. “I’m not saying it has a 100 per cent chance [of success], but I think we have a better chance of succeeding than failing.”
After months of fraught negotiations among the French telecos, the deal terms call for Bouygues to pay about 42 per cent of the €20.35bn price to take the largest chunk of SFR’s customers, while Iliad will pay about 31 per cent and Orange 27 per cent. Chunky break-up fees as well as a substantial earnout for Drahi are also included.
One EU antitrust official said the transaction would be among the first major tests of forthcoming merger guidelines that put greater emphasis on innovation, investment and economic resilience.
“Things are moving in that direction [but] it’s not finalised yet. As of yet you don’t have any legal precedent” under the new guidelines, Roussat said. He pointed to the UK’s approval of the £16.5bn Vodafone-Three merger in 2024 as an example that attitudes towards telecom consolidation were shifting.
Former competition official Jonathan Faull said the European Commission would prefer cross-border rather than national consolidation. However, operators have long been uninterested in such deals since they do not deliver profit boosts or cost savings and few in the industry expect that to change. “There is no economy of scale given the lack of a single market in telecom,” Faull admitted.
Brussels is preparing a shift in its competition policy, with draft guidelines published in April that put greater emphasis on the benefits of corporate scale, innovation and resilience.
The new guidelines are a key element of Brussels’ attempt to make the bloc more competitive in the wake of rivals such as the US and China. Telecoms companies were among the sectors most vocal about the need for greater scale in the guidelines.
It is not yet clear whether Paris or Brussels will take the lead on scrutinising the SFR deal, which is expected to close in the second half of 2027. Orange and Bouygues will file their submissions in France in the coming weeks, while Iliad will file in Brussels because of its broader European business.
Roussat said the substantive rules were the same in either forum, but dealing with French regulators could prove simpler and faster logistically as the companies are based in Paris.
Roussat, who previously led Bouygues Telecom before taking over the group from 2021, has reason for caution. In 2022 French regulators rejected a proposed takeover of Bouygues-owned broadcaster TF1 with smaller rival M6, which is owned by Germany’s Bertelsmann. “We were really burned because . . . we truly thought it would be allowed,” he said.
Given the rise of streaming services, the companies argued that the watchdog should broaden its scope to include digital advertising, not just television ads, but they disagreed. If that view evolved, Roussat said the group could rekindle takeover talks: “It would be interesting for TF1 to position itself on M6.”
Bertelsmann chief Thomas Rabe last year told the FT he hoped to revisit the idea of merging France’s two largest privately owned TV networks.
On SFR, the French competition watchdog has reminded the companies that approval had not been granted. The authority’s president, Benoît Coeuré, told Le Monde this week that the companies would need to demonstrate the deal’s “verifiable and, if possible, quantifiable” benefits, including for consumers.
“It’s not a given . . . but if we had already concluded that reducing the number of operators in the French market from four to three was necessarily anti-competitive, we would have said so, and we wouldn’t have let the operators exhaust themselves trying to reach an agreement,” Coeuré said.
Approving the SFR deal could lead to further consolidation across Europe.
Roussat argues that years of fragmented markets and aggressive price competition have weakened Europe’s telecom sector and set back the region’s tech sector compared with the US and China.
“At some point, we have to say, be careful, because what’s happening is actually becoming dangerous. We mustn’t have a system where, ultimately, we end up with . . . nothing left in Europe,” he said.