Bouygues to cut 1,516 jobs as French M&A talks collapse

French multi-play operator Bouygues has announced plans to cut more than 1,500 jobs, after CEO Olivier Roussat told a press briefing that consolidation-focused discussions being held with incumbent Orange and fast-growing newcomer Iliad had stalled.

Citing a 1Q14 loss of €19m the firm said it needed to invest in its network and cut its prices and that its headcount would have to be reduced by 17 per cent—1,516 jobs—in order that its transformation plan be sustainable. It will look to “very aggressive pricing” in fixed broadband in particular, the firm said in a statement on Thursday. It said that it would also look to improve its customer service activities.

“Obviously the talks did not succeed,” Roussat said. “We are cutting costs to survive in a four-player market.”

Bouygues was left isolated recently when it was outbid by Altice-owned Numericable for control of French operator 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 Iliad-owned 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 Bouygues’ announcement, French Economy Minister Arnaud Montebourg said that the government was keen to see consolidation rather than job cuts, Reuters reported. It is not clear why discussions between the three operators bore no fruit, however, particularly as incumbent Orange has publicly voiced its enthusiasm for consolidation.

In mid-May 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.”

How successful Bouygues is in implementing its transformation plan remains to be seen. But increasing network investment and stepping up customer experience efforts will clearly be challenging against the backdrop of further price cuts.