Bouygues has announced it has entered into exclusive negotiations with Free Mobile owner Groupe Iliad over the sale of its network and a portfolio of frequencies.
Last week, Bouygues announced it was making an offer to merge with SFR.
The move to sell its network to Free, which currently uses Orange’s network, is designed to smooth any fears from the competition authorities that a merger with SFR would create too dominant a player in what has become a fiercely competitive French market.
Bouygues said it will sell “a portfolio of 2G/3G/4G frequencies” and its mobile network “for a sum that could go up to €1.8 billion”.
Iliad, which said it would not need a capital increase to finance the deal, noted it will only go ahead if the Bouygues-SFR merger gets the green light.
Bouygues Group Chairman Martin Bouygues commented: “I welcome this agreement, since it means we can go to the Competition Authority with a plan for a merger between SFR and Bouygues Telecom which now includes measures that ensure strong, infrastructure-based competition on the French mobile phone market.”
The Bouygues statement continued that the deal would “help restore a level playing field in the mobile telecoms sector”, thereby boosting employment, facilitate investment “as desired by the public authorities”, and improve quality of service and innovation.
Free said the deal with Bouygues would speed up its “ambitious commercial dynamics”.
The news came as Iliad announced 2013 revenues rose 18.9 percent year-on-year to €3.75 billion and profit grew 42 percent to €265 million.
Revenues from Free Mobile increased by 49.5 percent to €1.3 billion, while sales from the group’s fixed line business rose 7.6 percent to €2.5 billion.
The company said its market share in the French mobile market now stands at 12 percent after its subscriber base grew by 2.8 million to break through the eight million barrier.
The fixed line business reported 276,000 net additions meaning its subscriber base increased to 5.6 million and its market share rose to 35 percent.
The company claimed to have the industry’s largest capital expenditure programme, citing that it invested 24 percent of its revenues (over €900 million) in 2013 to extend the coverage of its landline and mobile networks.
This year, it promised to deploy more than 1,500 mobile sites, reach a 4G LTE coverage rate of around 50 percent and reconfirmed its aim to claim 25 percent of the French mobile market “in the long term”.