Merger talks between France's part state-owned Orange and Bouygues Telecom have collapsed at the eleventh hour. Hayley Platt looks at what happened and where it leaves Europe's bloated telecoms sector.
The tie-up between France's part state-owned Orange and Bouygues was largely seen as a good thing. Consolidation in a bloated industry made sense. But at the eleventh hour talks collapsed. Sending shares in Bouygues down almost 15 percent. While Orange shares were down almost 5 percent. SOUNDBITE (English) BGC PARTNERS, MARKET ANALYST, MICHAEL INGRAM, SAYING: "It leaves Bouygues somewhat beleaguered I'm afraid and in the meantime you have a fiercely competitive mobile market, it would need to consolidate down to at least three players and it's not good news for any of them I'm afraid." The 10 billion euro cash and shares deal would have created France's biggest player. Reducing the number of mobile operators in France from four to three. It would also have required rivals Iliad and SFR to agree to buy some of Bouygues assets to ease competition concerns. But billionaire Martin Bouygues, wasn't happy with some of the conditions, particularly a government bid to cap his potential stake in Orange for seven years and giving up his double-voting rights for 10 years. It's disappointing for both parties. SOUNDBITE (English) BGC PARTNERS, MARKET ANALYST, MICHAEL INGRAM, SAYING: "It could well be that the substantial cost cuts which a tie up between Orange and Bouygues would have realised were rather too much for the French government to stomach." All four companies had wanted an agreement in the hope it would end the current price war. But with reports suggesting there's now little trust between Bouygues and any of the other telecoms tycoons - that could be a long way off.