Orange and Bouygues finally confirm acquisition talks

In the face of renewed speculation French telecoms giant Orange has confirmed it is in preliminary discussions with Bouygues Group over the potential acquisition of Bouygues Telecom.

The rumours and anonymously sourced stories about such a move have been coming thick and fast over the last few months and commenced with renewed vigour in the new year. In December last year both companies issued nuanced statements saying they weren’t in talks, with Orange even going so far as to say “In France, Orange is the telecoms operator that has the least need for consolidation.”

In spite of this Orange has now apparently decided consolidation still might be an idea and issued the following short statement: “Orange confirms that it has renewed preliminary discussions with the Bouygues Group with a view to a consolidation with Bouygues Telecom.” It then went on to hedge its position at greater length, essentially saying they might come to nothing and everyone needs to calm down.

With similar caveats Bouygues also issued a statement announcing the preliminary discussions with Orange and, in an apparent bid to pre-empt follow-up enquiries, said it has signed a confidentiality agreement with Orange.

It’s by no means a foregone conclusion that French regulators would approve any move, having gone to all the trouble of creating a fourth mobile operator in the form of Free Mobile a few years ago. All over Europe regulators are wrestling with their position regarding telco consolidation and if something like this were to be permitted it could signal a major softening of their stance.

Of less concern to regulators will be the unrelated creation of Orange Bank resulting from a partnership between Orange and French financial services company Groupama. Negotiations are still underway, but could result in Orange acquiring a 65% stake in Groupama Banque.

“Orange benefits from a unique combination of essential assets that will enable it to successfully launch a highly innovative, 100% mobile bank,” said Orange CEO Stéphane Richard. “Our partnership with Groupama, which has recognized expertise and key assets in the areas of both banking and insurance, will enable us to accelerate the implementation of our strategic ambition to be able to offer our customers Orange Bank services in France from the beginning of 2017.”