France's Orange, Bouygues in telecoms tie-up talks

France's telecommunications giant Orange is in talks to buy its smaller rival Bouygues Telecom, both companies said Tuesday, a move that would consolidate one of Europe's most competitive telecoms marketplaces. Orange, which is 20-percent owned by the French state, said it had "renewed preliminary discussions" with the Bouygues group but stressed they were not bound to any timeframe nor committed to "any particular predefined outcome".
Amid recent press reports of talks between the two groups, analysts had indicated that Orange may be facing a crunch decision over whether to shore up its position at home by gobbling up a competitor, or expand its presence abroad. "The group is exploring the opportunities available within the French telecoms market, while keeping in mind that its investments and its solid position afford it a total independence in its approach," Orange said in a statement.
It will be "particularly vigilant with regards to the value created through any resulting project", it added. Orange chief Stephane Richard told AFP on Monday that his company had been "thinking for a little while that there's a certain logic to a consolidation in France". The economy ministry declined to comment. However it highlighted that Economy Minister Emmanuel Macron said last month that he had no policy position on the number of operators in the market as long as investments in fixed line and mobile services are safeguarded.
That stance had evolved from June when he said consolidation was undesirable for the sector. News of the talks appeared to find favour on the Paris stock exchange, with telecom shares up on prospects of a condensing of the French market from four to three operators which could help reduce pressure on prices.
Having already risen Monday on early reports on the deal, shares in Bouygues closed 0.4 percent higher at 37.30 on the Paris stock exchange Tuesday, and Orange rose 0.7 percent to close at 15.31. "Everyone stands to gain from the fact there is one less player and therefore one less competitor," HPC trader Xavier de Villepion said.