Vivendi on Saturday accepted a 17 billion euros (US$23.3 billion) bid by French cable and fiber-optic network operator Numericable Group to buy its SFR mobile phone unit, rejecting a rival offer from telecoms group Bouygues Telecom.
“The supervisory board has unanimously decided to accept the Altice/Numericable bid,” Vivendi said in a statement, saying the offer was the more likely to favor “growth [and] create value for customers, employees and shareholders.”
The total value of the deal is more than 17 billion euros, the company said.
“All the experts consulted concluded that the Altice/Numericable offer presents the least risk in terms of competition. SFR and Numericable are not in the same segments of the market and their activities are complementary,” Vivendi added.
The deal with Altice/Numericable, which Vivendi called “a better balance,” would involve an initial payment of 13.5 billion euros, followed by another payment of 750 million euros and eventually the ability to own and then sell its 20 percent stake in the new enterprise.
The fate of SFR was seen as having a big impact on the structure of mobile phone services in France against a background of consolidation in European markets.
A takeover of SFR by Bouygues would have reduced the number of dominant operators to three, generating some political controversy and raising concerns among consumer groups that the benefits of new competition for customers would be eroded.
The launch of low-price services in 2012 by the much smaller, new fourth operator, Free, sowed upheaval and a price war in the French mobile telecommunications market, to the benefit of consumers.
However, SFR’s incorporation into Numericable will keep four operators on the market, though strengthening SFR-Numericable’s position as a powerful competitor capable of offering customers a complete package of mobile, Internet, television and fixed-line telephone services.
Politically, there has been some opposition to an SFR sale involving Numericable’s parent company Altice, a foreign-registered group owned by Frenchman Patrick Drahi, who is a resident of Switzerland.
The French government, which is struggling to bring down its public deficit, has been bluntly critical of citizens who keep their assets in tax havens like Switzerland, Luxembourg or the Channel Island of Guernsey.
New French Minister of the Economy, Finances and Industry Arnaud Montebourg, who gained the office in a government reshuffle last week, last month as French minister of industrial renewal publicly criticized Altice’s bid and Drahi.
On Saturday, Montebourg said in a statement that his ministry would “redouble its scrutiny” of the deal with Altice/Numericable, “so that no jobs are cut after the merger.”
He also said France would ask Numericable to assure that it would install the “technologies of the future” in telecommunications and “to prove its economic patriotism by the choice of its suppliers.”
Numericable, which is registered in France and is quoted on the Paris stock exchange, already has government contracts.
Vivendi also said the decision to sell to Numericable puts an end to plans to float SFR on the stock market.
The bidding war over SFR was just one of a number of deals being done in the European telecommunications sector as firms try to ensure they have both mobile and home networks to offer clients one-stop service.