Numericable gets green light for SFR with conditions

Numericable’s LaBox Fibre

France’s competition authority has given the green light, with conditions, to the acquisition of SFR by Numericable to create a high-speed fixed internet and mobile rival to Orange. 

The competition watchdog is imposing significant obligations on Numericable for an initial five-year period, with the possibility of renewing them for a further five years.

One of the most important conditions for Numericable is that it must open up its high-speed network to competitors with a bitstream-type white label wholesale offering. Bouygues Telecom already uses Numericable’s network on this basis to extend its reach. The authority noted that this is the first time in Europe that a competition regulator has opened up a cable network to competitors in this way.

Numericable acknowledged that it had agreed to provide two access products – one aimed at MVNOs that did not have their own fixed access network and one aimed at MVNOs and network operators that use their own client interface.

The regulator noted that “Numericable profits from a significant lead in the [high-speed] market and its competitors will not have access to an equivalent network for several years”. It said that Numericable would be able to target SFR’s mobile and ADSL subscribers and migrate them to its cable network, leading to the possibility that Numericable could pre-empt the build-out of fibre networks by its rivals, particularly as SFR has previously entered into agreements with Bouygues Telecom and Orange to share the burden of building out fibre. Numericable has committed not to oppose the deployment of fibre by Orange in areas previously reserved for SFR under the pair’s agreement.

Regarding pay TV, Canal+-owner Vivendi will hold a minority stake in the new entity and will nominate members of its administrative board. Numericable has agreed to put in place a Chinese wall whereby Vivendi representatives will absent themselves from discussions around pay TV activities.

Altice/Numericable has also agreed to sell its business-to-business arm Completel’s copper network, and to sell its French overseas territories operator Outremer Telecom’s mobile activities.

The competition authority’s approval opens the way for the completion of the deal before the end of the year.

Patrick Drahi, the investor behind Altice, will become president of the combined entity, with current Numericable chief executive Eric Denoyer becoming CEO. Current SFR CEO Jean-Yves Charlier will remain with the company for now as adviser to Drahi, charged with supervising the integration of the two entities and overseeing Altice’s international interests.

Drahi is betting heavily on the benefits of selling SFR’s mobile services to Numericable subscribers and Numericable’s high-speed internet services to SFR customers. Numericable is spending a total of €13.5 billion to take control of its larger rival, including €8.8 billion in debt, and has identified €1.1 billion in synergies, including both its ability to cross-sell services and to reduce costs.