France's Orange and Bouygues Telecom have revived talks over a merger that will create a telecoms giant with more than 50 percent of the country's fixed-line and mobile markets. As Grace Pascoe reports, the French government may not welcome the move.
More French telecom tie-up talks - this time Orange and Bouygues are having M&A discussions. If the two do become one it will leave France with just three major telecoms operators. Admiral Markets Darren Sinden. (SOUNDBITE) (English) ADMIRAL MARKETS, MARKET COMMENTATOR, DARREN SINDEN, SAYING: "Bouygues is probably taking the view that the telco business that it runs is a significant subsidiary of its own business but not necessarily of the telecoms industry as a whole in France and the merger with Orange probably makes a certain amount of commercial sense. After all prices have been under a tremendous amount of pressure in France in terms of what consumers are charged. But the level of investment that is required into the networks doesn't go down." The French government stood in the way of a previous bid by Altice for Bouygues. Stating a combined firm would be "too big to fail". But with this one Sinden says their stake in Orange may only fall by around three percent to 20 percent. And Bouygues would own the next largest share. (SOUNDBITE) (English) ADMIRAL MARKETS, MARKET COMMENTATOR, DARREN SINDEN, SAYING: "I think probably it is the best deal they could hope for. They would probably rather see a deal between two companies that they know very well rather than one of the upstarts if you will, Iliad or Altice coming along and trying to take control of one of the other companies." French newspapers say the deal could be worth 10 billion euros or 10.7 billion dollars In a combination of cash and shares. Both Bouygues' and Orange' shares rallied 1.5 percent after the talks were confirmed.