Expert comment on Orange and Bouygues Telecom merger collapsing

Warwick. Expert comment on Orange and Bouygues Telecom merger collapsing John Colley, of . John Colley is a Professor of Practice in the Startegy and International Business Group and researches large mergers. He is also a former managing director of a FTSE 100 company.
Professor John Colley said: “Margins have been struggling in the French telecom market and the merger of Orange with Bouygues was intended to address that. Research from other telecom markets finds that three players have higher prices and lower costs than four. This is no surprise as there are less competitors to compete with and fewer shops, masts, plus less advertising, administration and management.”It is unclear why the deal collapsed and it seems that Bouygues’ directors would lose out in the resulting allocation of jobs. However, clarity over leadership would have reduced execution risk. Undoubtedly competition authorities would be involved as the combined market share of Bouygues and Orange would have been almost 50%, well above the interest threshold. Typically in the telecoms industry the largest player is the most profitable as they enjoy the highest call volumes and customer numbers through what is a fixed cost structure.”But Bouygues is now in play so expect Altice to come back with a second bid, which Bouygues may struggle to reject this time. Bouygues’ shares are down 15% already, which makes a bid from Altice look more attractive than last time.”