The decision of the Paris Court of Appeal, rejecting the use of unions against the accelerated safeguard plan of Altice France, lifted yesterday the last legal obstacle and Patrick Drahi can now finalize, on October 1, the restructuring of SFR debt. This will drop from 24 to 15.5 billion euros, in exchange for an entry of American creditors Blackrock, Pimco and Fidelity up to 45 % of the capital. If Patrick Drahi retains the majority, the operation opens the way to a sale of the operator long awaited by the main players on the market.
With 25 million customers and key infrastructure, SFR represents a real growth boon for its competitors. Thus the discussions between Orange, Bouygues Telecom and Free would have been engaged behind the scenes for months, with in the background the hypothesis of a return to three actors in France. But competition constraints limit Orange’s ability to resume a significant part of the operator, so it is Free and Bouygues who appear to be the real contenders.
However, these exchanges would be the subject of many tensions, with the lusts, Red by SFR, the low cost brand, of which SFR would claim 4 billion euros, an amount deemed excessive by Xavier Niel, who wishes to recover only the subscribed base and which Bouygues does not intend to leave him. Another blocking point, the sharing of the 15,000 antennas operated in common by Bouygues and SFR since 2014, Bouygues refusing to assume the costs alone. On the side of mobile frequencies the tensions are also important, orange to keep its lead over its competitors. Finally, valuation further complicates the file. If the restructuring agreement fixes the value of SFR at 26 billion euros, JP Morgan rather estimated it at 20 billion last May. Free and Bouygues, interested but careful, refuse to pay a high price for an active price whose operational performance is fragile.
Aware of the situation and rivalries between operators, Patrick Drahi would have been personally involved in discussions and would have taken stock with each of the protagonists, with a view to mediation intended to bring closer to the still distant positions, as appetites and the red lines diverge.
If he keeps the hand on the calendar and tries to orchestrate an orchestrated outing, the balance of power is delicate, demanding too much risks exploding discussions between Free and Bouygues, whose relationships are historically difficult, accepting less weakens his agreements with the creditors. In this balance game, not only the reconfiguration of the French telecom market is at stake, but also the future of SFR and that of its 8,000 employees.
