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Altice and Omer Telecom have entered into exclusive negotiations, in order to start the consultation of the employee representative bodies concerned, as also required under French law, and to finalize the acquisition agreements. The shareholders of Omer Telecom are Sir Richard Branson’s Virgin Group and Sir Charles Dunstone’s Carphone Warehouse Group. Virgin Mobile France is a mobile virtual network operator, and has used the Orange network since its launch in 2006.
If the deal goes ahead Altice is committed to funding its unit Numericable France with a further contribution of US$275 million (Euros 200 million) to provide the equity component for the deal.
Commenting on the first quarter results, Dexter Goei, Chief Executive Officer of Altice said, ”We began the year strongly, both operationally and financially. Integration of the companies we acquired last year continues to go well, driving improved margins and strong cash flow growth, ” adding,
“We are delighted to have agreed the purchase of SFR in France and to have closed our acquisitions in the Dominican Republic. We see strong growth opportunities in both these areas and across our portfolio.”
In further news today Bloomberg is reporting that the number 1 French mobile operator Orange, with 26 million subscribers is now in conversations with the number 3 operator Bouygues which has about 11 million subscribers. The subject of the conversations could include network sharing and even ideas for a full merger of the two.
During the period of negotiations between vivend and Patrick Drahi’s Altice the French Minister for the economy had publicly called for a Bouygues victory, hoping to reduce the number of players in the French mobile market.
Whilst one might think it odd for an Economy minister to publicly espouse less competition, in French eyes it appears to some to make good sense. Since the fourth largest player Iliad had entered the market, stealing some 7 million subscribers away from the big players long the way through average prices for mobile telephony have fallen drastically in France.
After losing with his own bid for SFR to Altice, it seems that giant French construction group Bouygues, which is led by Martin Bouygues and which owns Bouygues Telecom, may have persuaded the French Economy Minister Arnaud Montebourg to back his talks with Orange, which is 27% owned by the French government through France Telecom.
So at some point the party will come to an end and will prices go back up a bit, though it is obviously a delicate dance the government has to play between consumer and industrial interests, and to encourage the stability needed to continue to roll out large investments in 4-G, and indeed even more advanced, networks for high speed broadband.
Nevertheless, this kind of philosophical environment for telecoms development is likely to enhance the likelihood of Altice now picking up Virgin Mobile France as well, also without antitrust objections from the French government.
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Patrick Drahi’s Altice telecoms group also announced its first quarter results today, which represented modest progress while it awaits approval for the merger of its Numericable France cable unit with the number two French mobile phone company SFR with 21 million subscribers.
Revenues of about US$ 1.1 billion (Euros 828 million) were down just 1% on a constant currency basis compared to the first quarter a year earlier.
EBITDA however (earnings before deducting depreciation, amortisation, interest and taxes), which is a key metric for telecoms companies which utilise substantial financial leverage as a normal balance sheet behaviour, at about US$503 million (Euros 367 million) was actually up 7.4% over the year relier period on a constant currency basis.
Commenting on the first quarter results, Dexter Goei, Chief Executive Officer of Altice said, ”We began the year strongly, both operationally and financially. Integration of the companies we acquired last year continues to go well, driving improved margins and strong cash flow growth, ” adding,
“We are delighted to have agreed the purchase of SFR in France and to have closed our acquisitions in the Dominican Republic. We see strong growth opportunities in both these areas and across our portfolio.”
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