Orange gains as Iliad, Bouygues reportedly talk merger

|About: Bouygues SA ADR (BOUYY)|By:, SA News Editor

Le Parisien reports upstart French carrier Iliad is in talks to buy rival Bouygues' (BOUYY) mobile ops in a deal whose price tag could range from €5B-€8B.

The report comes after Vivendi spurned a Bouygues bid for SFR in favor of a €17B+ offer from Altice/Numericable. Prior to Vivendi's decision, Bouygues had struck a deal to sell assets to Iliad (in order to appease regulators) in the event of a successful bid.

Orange (ORAN +1.6%) is trading higher. An Iliad/Bouygues deal would lower the number of French mobile carriers to three. At the same time, it would give Iliad, which currently depends on a wholesale deal with Orange to provide services, with its own network.

Iliad has been grabbing share and pressuring the margins of rivals with the help of a business model featuring aggressive pricing and the use of its broadband customers' Internet gateways as public Wi-Fi hotspots.