The acquisition of Bouygues Telecom by Numericable-SFR, which is widely expected by investors in France, could be less attractive than anticipated, according to analysts at Exane BNP Paribas.
In a note reported in the French press, Exane BNP Paribas has downgraded its rating of Numericable-SFR from neutral to underperform on the basis that an acquisition of Bouygues’ telecom unit would likely be conditional on it divesting part of its mobile subscriber base, most likely to the benefit of rival Free.
While the acquisition is expected to generate synergies of around €6 billion and additional value from a recovery of the overall market to the tune of around €2 billion, Exane BNP Paribas estimates that a loss of around 5% of the subscriber base as a result of regulatory conditions would reduce the value of the combination by about €2 billion.
Exane BNP Paribas also downgraded its recommendation on Bouygues from overperform to neutral.
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