Opposing reactions in Paris to Sfr purchase, up Orange and down Bouygues

  (Il Sole 24 Ore Radiocor) - Opposite directions at the Paris Stock Exchange (CAC 40) for Bouygues and Orange after the deal to acquire Sfr signed over the weekend. Bouyues Telecom, Orange, and Iliad-Free (unlisted) have reached a memorandum of understanding with Altice France to acquire Sfr in a EUR 20.35 billion deal, which shapes the tlc landscape in France. According to the memorandum, Bouygues will bear 42% of the price, Iliad 31% and Orange 27%. The transaction price will be subject to accounting adjustments, including a potential earn-out payment of up to EUR 650m. The adjustments will also take into account the exact amount of net debt at the closing of the acquisition and the seller's compliance with financial and regulatory commitments until that date.

In October 2025, Altice France rejected an initial offer from the three groups, which valued Sfr 17 billion euros, including debt. As part of the memorandum of understanding, termination penalties were also agreed, ranging between 100 million and 2 billion euros. The transaction includes most of Altice France's assets. The B2C branch, which includes Sfr's mobile telephony business for private individuals, will be shared between Bouygues Telecom, Iliad and Orange, while the B2B branch will be taken over by Bouygues Telecom. Other assets and resources, including infrastructure and frequencies, will be shared between Bouygues Telecom, Iliad and Orange, with the exception of Sfr's mobile network in sparsely populated areas, which will be taken over by Bouygues Telecom.

The stakes held by Bouygues Telecom, Iliad and Orange would account for 52%, 27% and 21% of the revenues of the assets involved in the transaction and 42%, 33% and 24% of their Ebitdaal, respectively. Last year, these assets generated revenues of EUR 8 billion and an Ebitdaal of EUR 2.6 billion. Orange indicated in its press release that the expected cost synergies from the transaction will exceed EUR 500 million per year five years after the finalisation of the deal, mainly due to the optimisation of infrastructure, network and distribution assets. Therefore, once these synergies are realised, the Ebitdaal of the acquired business will represent a positive contribution of approximately EUR 900 million per year to Orange France's balance sheets.

"The estimated integration costs will be spread over five years for a total of EUR1.3 billion," the group added. The former France Télécom plans to finance the operation with debt and reiterates its ambition to maintain a net debt-to-Ebitdaal ratio for its telecoms business around 2 in the medium term. Orange also confirmed its capital allocation policy, with a gradual increase in the dividend to a minimum threshold of EUR 0.85 per share for the 2029 dividend, under the 2028 financial year. For its part, Bouygues Telecom expects cost synergies of around EUR 1 billion per year, the full effect of which is expected in 2034, due to the timing of the integration of SFR's B2B business. Integration costs related to the transaction are estimated at between EUR 3.5 billion and EUR 4 billion for Bouygues Telecom, which plans to finance them through a fully guaranteed bank loan from partner banks.

The division of Sfr between Bouygues Telecom, Free-Groupe Iliad and Orange, which would reduce the number of telecommunications operators in France to three, offers several advantages, according to the consortium members. Firstly, it allows them to increase investment in ultra-high-speed network resilience, cybersecurity and innovation, and new technologies such as artificial intelligence. Bouygues Telecom, Iliad and Orange also hope to consolidate control of the country's strategic infrastructure and preserve a competitive ecosystem for the benefit of consumers.