SFR, Numericable reported to be in merger talks

Pascale Paoli-Lebailly | 16-10-2012

Vivendi-owned telco SFR and cable operator Numericable are rumoured to be in discussions about potentially merging their activities to give birth to a French ultra-fast broadband (UFB) heavyweight.
The objective is to make the new entity to leverage both Numericable’s high-speed broadband triple play network (715,000 subs including 500,000 to FTTB, 4.6 million households passed) and SFR’s 16 million mobile customer portfolio, and 5 million fixed subs.
With the advent of Free on the telecom market, Vivendi would like to disengage from telecoms to focus on content while equity fund Carlyle, a Numericable co-owner with Altice, would like to get out of the business. Numericable’s debt amounts to €2.9 billion.
According to reports in the French press, the parties are exploring the possibility of SFR keeping 49% of the new listed entity, along with a €4 billion cash compensation. Analysts calculate that cost reductions and synergies would save another €1 billion.
Another scenario calls for the new entity to be sold to Vodafone. In June 2011, Vivendi bought Vodafone’s 44% share of SFR for over €7.7 billion.