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Numericable in bid for Virgin Mobile as French consolidation gathers pace

VirginMobile

VirginMobileCarphone Warehouse, which earlier this week announced plans to merge with UK high street consumer electronics retailer Dixons, has announced that it is in discussions to sell Omer Telecom, the holding company which owns Virgin Mobile France, to French cable player Numericable. In April this year Numericable’s parent Altice struck a deal to acquire French mobile operator SFR, which it intends to merge with Numericable.

The value of the deal is €325m according to Carphone Warehouse, which owns 46 per cent of Omer Telecom. The remainder is held by Richard Branson’s Virgin Group. Virgin Mobile France currently operates on the Orange network but, if this deal is successful, it would likely strike a host deal with SFR.

While a relatively small transaction compared with the €13.5bn that Altice is paying Vivendi for SFR—Vivendi will also receive a 20 per cent stake in the merged company should the deal be approved—the Virgin Mobile deal increases the pressure on third placed French operator Bouygues, which had mounted its own bid for SFR.

With 11.86 million customers, according to numbers from Informa’s World Cellular Information Service Plus, Bouygues is some distance behind second-placed SFR, on 20.96 million and market leader Orange on 26.73 million. Meanwhile the hugely disruptive Free Mobile is hard on Bouygues heels, having roughly trebled its subscriber base in two years, to 9.23 million at the end of the first quarter this year.

In the wake of the Virgin Mobile deal being announced, reports emerged that Bouygues and Orange may be in merger talks. Orange published a statement on its website in which it said that it was “assessing the opportunities that the changing landscape in the French telecommunications might offer,” adding that it believes “consolidation in the French mobile market would be positive in the long term for both investment and for the consumer.”

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