PARIS--Vivendi SA's French telephone company SFR and local
competitor Bouygues Telecom entered exclusive talks Monday to share
parts of their mobile-phone networks in France, the latest
cost-saving move by French operators as they reel from a brutal
price war.
SFR and Bouygues--respectively, France's No. 2 and No. 3 mobile
operators by number of subscribers--said late Monday that they hope
to come to a strategic agreement by the end of the year to share
parts of their mobile phone networks, using a model similar to
those already in operation in other countries.
The two companies said their proposed network-sharing agreement
would allow them to boost their geographic coverage and face "the
challenge of investing in super high bandwidth networks."
But they added that they would retain an "independent capacity
for innovation, and total commercial independence."
Network-sharing deals let operators share towers, and in some
arrangements even antennas, transmitter equipment and maintenance
personnel. That can allow significant savings as operators roll out
expensive network equipment.
Since last fall, France's four main phone operators, including
incumbent Orange SA, and low-cost upstart Iliad SA, have been
privately discussing such an agreement, according to people
familiar with the matter, as a way to cope with a price war started
when Iliad launched its Free Mobile operator in January 2012.
Network sharing is popular in Europe's fragmented
telecommunications landscape, where more than 40 companies own
operators across the union's 28 countries.
European antitrust regulators have been reluctant to allow
mergers within individual countries, and mobile operators often
regard network sharing as the next-best thing.
France has lagged behind its neighbors in network sharing,
however, because government and regulatory policies have looked to
lower prices for consumers by increasing competition among network
owners.
But now, under a new Socialist government, ministers have been
receptive to arguments from companies like Orange that low prices
are spoiling the telecom market and hurting France's industrial
base.
Last fall, the French government asked the independent antitrust
watchdog to review network-sharing deals. In March, the watchdog
said it was ready to bless them in certain instances--such as in
rural areas, or for physical towers in cities.
After Monday's announcement of the SFR-Bouygues talks, French
Industry Minister Arnaud Montebourg and Technology Minister Fleur
Pellerin said in a joint statement that network-sharing agreements
are part of the government's strategy, and "appear particularly
appropriate when margins are more constrained, as is the case
currently."
Write to Sam Schechner at sam.schechner@wsj.com
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