Orange Is Thinking About Acquiring Bouygues Telecom

Who will buy Bouygues Telecom? Rumor has it that the telecom company has been looking for a buyer for a while now. And it looks like Orange might be interested after all in order to make sure it remains the telecom leader in France.

Bouygues Telecom is in a tough position right now. It is stuck between two telecom giants on one side (Orange and SFR/Numericable) and a young and scrappy competitor when it comes to mobile (Free). Free has developed a cost-effective strategy by staying lean.

In other words, Bouygues Telecom doesn’t have a big network like Orange and SFR, and it can’t compete on price with Free because of operating costs. Moreover, with the number of phone carriers in France now at four, it has become an incredibly competitive industry.

And yet, Orange is a surprising potential buyer. Orange is still the leading carrier in France, is steadily investing in its infrastructure. It doesn’t need Bouygues Telecom to expand its network or get more clients. But it would also make the telecom landscape in France less competitive — a great way to raise prices.

Now, a few things aren’t set in stone yet, starting with the price. It’s unclear how much Orange is willing to pay to acquire Bouygues Telecom. There are also antitrust questions. Orange could give back part of Bouygues Telecom to Free for instance so that Free can keep up with the competition and Orange/Bouygues Telecom isn’t overwhelmingly leading the market.

So this acquisition is still a work in progress, but it could have some significant consequences on the telecom industry in France.