French Government Hopes SFR Deal To Cut Market Players to Three-Report

PARIS--The French government is hoping that a takeover bid on mobile phone operator SFR will stop the price war that has weakened the country's mobile phone companies, as the number of competitors is cut to three from four, industry minister Arnaud Montebourg said in an interview to daily Le Parisien.

The sale of SFR, a unit of media conglomerate Vivendi SA (VIV.FR), has spurred a bidding war between conglomerate Bouygues SA (EN.FR) and cable-investment firm Altice SA (ATC.AE), which owns cable operator Numericable Group SA. Bouygues last week offered 10.5 billion euros ($14.6 billion) in cash to merge its Bouygues Télécom unit with SFR. Altice offered EUR11 billion in a competing bid.

Mr. Montebourg said that if Numericable takes over SFR, the ongoing price war between the four mobile phone operators--including Iliad SA(ILD.FR)'s Free and Orange SA (ORA.FR)--won't stop, and that one of the four companies is likely to be pushed out of the market.

"Destructive competition will stop if we go back to three mobile phone operators," Mr. Montebourg told the newspaper. "It won't stop if Numericable conquers SFT, because there will still be four competitors. In the end, either Free or Bouygues will be all washed up, with thousands of jobs lost."

The minister also repeated that the government expects from the bidders a commitment not to cut jobs, to float the new company on the Paris stock exchange, to keep the headquarters and research and development centers in France and to use French supplier Alcatel-Lucent SA (ALU.FR) for their equipment.

Newspaper website: www.leparisien.fr

Write to Gabriele Parussini at [e-mail]