Likes it so much he's looking to sell the company

Ian Scales
By Ian Scales

Mar 10, 2014

It’s all a bit confusing (see - Bouygues bids a merger with SFR). Is this the sort of outcome a competition policy is supposed to foster? Well, no. But then, both the French government and France’s mobile telecoms network executives have a strange idea of proper competition. It’s OK as long as it doesn’t disrupt the market, cause a price war or lead to job losses. And you thought this was what competition was for?

Here’s the back-story. Free comes into the market in 2012 and radically undercuts its three rivals on price. A war ensued in which all the prices plummet dramatrically. By the end of last year the French government, having had its ear bent by the executives of the other mobile network operators, started talking tough about too much price competition.

The solution, thinks Bouygues, one of the three other French mobile telcos, is for it to buy its larger rival (the number two, SFR) and, to allay fears of it becoming too powerful, to actually sell of its own network to the number four operator, the disruptive Free, which caused all the problems in the first place.

So if Vivendi goes for Bouygues bid (there’s another offer from a cable property on the table) and the regulators say ‘yes’, Bouygues will add its customers to SFR’s network and sell off its own network, with its 15,000 antennas, to Free for up to €1.8 billion.

According to Bouygues chief executive, Martin Bouygyes, the deal would ensure “strong competition in the mobile market.”

Really? In fact the whole idea of the deal is to ensure less price competition in the marketplace, otherwise why do it? Free says that if the deal goes through it would stay as disruptive as it’s been up to now. That seems unlikely too. A three-player market is always less competitive that a four player market.

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