SFR for sale: Bouygues Telecom sees red, Free wants to afford a large part of the cake

The announcement of the restructuring of Altice’s debt, facilitating the sale of SFR, sparked negotiations between Orange, Bouygues Telecom and Free. If a passage of four to three operators seems acquired, the path remains strewn with pitfalls, with tensions on the distribution of SFR assets, which cannot be sold in a single block. It should be remembered that the red square is just over 19 million mobile subscribers, and 6 million subscribers on the fixed network.

Red by SFR, a strategic asset

One of the major points of friction of the discussions concerns the Red by SFR brand, the segment low-cost of the telephone operator. Free, quite ambitiously, expressed his desire to recover the entire brand corresponding to the offer online of the operator since 2011. Free’s ambition to appropriate Red immediately displeased Bouygues Telecom, who sees a threat to his B & You offer. The two operators also compete for Premium customers from SFR, a key segment.

Another discord point lies in the infrastructure shared between SFR and Bouygues. Indeed, the two operators today pool a network of 15,000 mobile branches As part of the Crozon agreement. If SFR disappears, Bouygues will have to assume the costs alone, estimated at several hundred million euros per year. Bouygues therefore requires compensation for free and orange, but the latter are reluctant.

Size financial issues

The valuation of SFR remains a subject of debate. If Patrick Drahi, the owner of Altice, expressed high ambitionsevoking a value of 30 billion euros for SFR, the more realistic estimates suggest that the sale could end around 21 billion euros. This upheaval will probably affect consumers, with an increase in prices linked to the reduction of competition.

Although negotiations are currently concentrating between historic French operators and that it is unlikely that a solution comes from elsewhere, foreign actors, including operators from the Middle East and investment funds, have also expressed their interest in SFR. This could revive the auctions and modify the dynamics of the transaction with, on arrival, inevitable repercussions for consumers, and a new player very different from traditional French competitors.

The fate of the 300 physical stores of SFR pending

The future of the 300 shops with a red square and the 8,000 employees who work there is also a subject of great concern. To date, none of the parties involved in the negotiations seem to be interested in the acquisition of the shops present throughout the territory, which makes fear of significant social consequences. The unions already fear a major social plan in the event of sale at cutting.

While operators are positioning each other to recover a part of the cake, it seems more and more likely that the French telecoms market will only have three operators in the near future. However, all negotiations remain suspended for the approval of the Competition Authority and the French authorities. The government, anxious to maintain a competitive telecoms sector, closely monitors these developments. Back to school is therefore upset!

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