France OKs Bouygues' La Poste buy, but the deal's not done yet

An antitrust investigation into the proposed transaction concluded pretty swiftly that it poses no risk to competition, but we still cannot say with any certainty that the deal will close soon. Rival operator SFR still has a part to play, and local press reports suggest it is still digging its heels in on the terms of the sale.

Bouygues Telecom agreed an exclusivity deal to buy mobile virtual network operator La Poste Mobile from its parent companies La Poste – the French post office service – and SFR in February. There had been talk of interest in the country's largest MVNO from Orange and Iliad too, but it was Bouygues that managed to broker a deal.

However, a fly soon appeared in the ointment: in May. Bouygues was forced to announce that it may not be able to complete the transaction as scheduled – it was aiming to tie everything up by the end of the calendar year – due to a dispute between SFR and La Poste over the terms of the deal. All we knew back then was that the pair had turned to the dispute mechanisms written into their shareholders agreement.

Given that Bouygues notified the Autorité de la concurrence of the proposed takeover in mid-July, it's tempting to assume that the kinks have been ironed out and things are moving forward; there was nothing on that score from the competition body in its announcement and Bouygues Telecom has not made a public statement either. But according to the French press, the issues remain, although information is still patchy.

SFR is contesting the terms of the deal with fellow shareholder La Poste, La Tribune noted in the wake of the competition body's green light. It did not elaborate. However, it pointed out that for the deal to progress it requires the approval of SFR, which holds 49% of La Poste Mobile, to La Poste's 51%, and has a right of pre-emption, which essentially gives it first right of refusal on its partner's shares.

There would be an obvious benefit to SFR in selling the shares; the telco is a subsidiary of Altice, which is working hard to cut debt, and at just shy of a billion euros for an MVNO with a couple of million customers, the sale price seems more than fair.

However, SFR also has the benefit of hosting the MVNO on its network, which is presumably a fairly lucrative revenue stream that it is reluctant to lose. Its current wholesale deal runs until the end of 2026, after which point Bouygues would naturally look to migrate the La Poste Mobile customers to its own network.

There's also the question of losing ground to a competing mobile network operator. SFR and Bouygues Telecom are France's second and third largest MNOs, and market competition is strong. But arguably more importantly than the customer base Bouygues Telecom would acquire through the deal is access to La Poste's distribution network, which is spread throughout France and is particularly relevant in rural areas.

Indeed, that appears to have been the main cause for concern in the Autorité de la concurrence's antitrust probe, although having mulled the situation it dismissed any fears of harm to competition.

"The importance of this distribution network should be put into perspective, given the growing share of distance selling (online and telesales) in the mobile telephony market, which now accounts for two-thirds of mobile telephony sales," the Autorité said. "Consumers will continue to have access to alternatives via this sales channel, which covers the whole of mainland France, including rural areas where Bouygues Telecom’s competitors do not have physical branches."

The Autorité also set aside any concerns over Bouygues Telecom deliberately restricting competition in the wholesale space following the deal, noting that there are already regulatory mechanisms in place to address that. And it also pointed out that La Poste Mobile's limited market share would mean the landscape of the retail market would not change in a meaningful way should the deal go ahead.

"At the end of its competitive analysis, the Autorité therefore cleared the transaction without conditions," it said.

That is, of course, good news for Bouygues Telecom. But one way or another it still needs to get SFR onside.