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French government warns off 10bn-euro telecoms merger

A Bouygues Telecom company logo is seen on the facade of the Sequana tower, the company's headquarters, in Issy-Les-Moulineaux, in this May 16, 2014
A Bouygues Telecom company logo is seen on the facade of the Sequana tower, the company's headquarters, in Issy-Les-Moulineaux, in this May 16, 2014 REUTERS/Charles Platiau/Files

Patrick Drahi, the owner of France's number two telecoms player has offered to buy smaller rival Bouygues Telecom for about 10 billion euros in cash. But the government has described the move as "undesirable".

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Franco-Israeli media magnate Drahi already owns France's telecoms operator Numericable-SFR as part of his Altice group.

He would gain a dominant position in the sector if he were to acquire the telecom division of Bouygues construction and media conglomerate.

Bouygues's board reportedly will examine the offer "at the start of the week".

The story was first reported by Le Journal du Dimanche (JDD) newspaper, which cited unnamed sources saying, "The negotiations are continuing this weekend with Martin Bouygues, the group's CEO, demanding an improved offer (by Drahi), to 11 billion euros."

However, the government thinks this may encourage less competition in the mobile phone sector, where a busy playing field has kept prices low for consumers.

"Now is not the time for opportunistic tie-ups which may be of interest to some people but which are not in the public interest," said Economy Minister Emmanuel Macron.

"Jobs, investment and better customer service are the priorities," Macron said, adding that recent cases in Europe had shown telecoms mergers to have a "negative" impact.

But, according to JDD, the deal may not be a straight takeover of Bouygues Telecom but more a dismantling of its assets.

The board could still reject the offer, even if it has been described as "the most serious offer in years" by someone close to the dossier.

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