The sales and network departments of French mobile and broadband operator SFR and cable operator Numericable have held technical meetings as part of the companies' potential merger, reports Les Echos. The two parties already held 'highly preliminary' discussions, reported Le Journal du Dimanche in the middle of October. If SFR and Numericable are merged, Vivendi could own about 40 percent of the enlarged company and receive up to EUR 8 billion in cash, leaving the merged SFR-Numericable a debt of EUR 10-12 billion. Vivendi would pay down its EUR 14 billion debt to EUR 6 billion and Numericable would pay Vivendi around EUR 1 billion a year in dividends over several years to help it reduce its debt.
Yet, Numericable, which is worth around EUR 3.7 billion, is too small for a beneficial merger with SFR, according to French bank Natixis. It would only produce EUR 1.3 billion of synergies. Natixis sees a merger between SFR and Free as a more decisive move, as it would create a rival to France Telecom and would give Vivendi more in return. Iliad, the parent company of Free and Free Mobile, is worth EUR 7.8 billion. Although Iliad’s Xavier Niel and Vivendi’s Jean-Rene Fourtou met in July, the companies categorically deny any merger talks.
