UPDATE 1-French watchdog against SFR, Free merger plan-report

Thu Jan 3, 2013 6:38am EST

* Antitrust watchdog against informal merger plan - report

* Vivendi, Iliad sounded out regulator - report

* Vivendi, Iliad, Autorite de la Concurrence decline to comment (Adds details, background)

PARIS, Jan 3 (Reuters) - France's antitrust watchdog has opposed a proposal by Iliad and Vivendi to merge their mobile telecoms units, BFM radio reported on its website on Thursday.

The two companies have contacted French competition authorities about a possible merger between Iliad's low-cost mobile operator Free and Vivendi's SFR, BFM said, without citing sources.

The regulator said it would oppose a merger because it would create a duopoly in the French broadband internet market along with France Telecom's Orange, the website added.

SFR, Vivendi's biggest unit, has suffered from the arrival of Free in the market last January.

Entertainment-to-media conglomerate Vivendi began a strategy review in May to boost its flagging share price and cut debt, and has put units in Brazil and Morocco up for sale.

Its chief executive said last month the future of SFR would depend, in part, on whether regulators approved network-sharing deals or mergers, after he predicted the group's future would lie in its content and media business.

BFM also reported industrialist Vincent Bollore, who was given a seat on Vivendi's board in December, would be opposed to a merger between SFR and French cable operator Numericable.

Iliad, Vivendi and France's antitrust watchdog, Autorite de la Concurrence, declined to comment.

Vivendi shares were trading 2 percent lower at 17.08 euros while Iliad was down 0.6 percent at 131.6 euros at 1115 GMT. (Reporting by Elena Berton and Matthieu Protard; Editing by Dan Lalor and Mark Potter)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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