* 1,516 jobs to be trimmed out of 9,000
* CEO says sale talks with Orange, Iliad fell through
* New commercial push in fixed broadband
(Adds sources, price disagreement, shares)
By Leila Abboud and Gwénaëlle Barzic
PARIS, June 11 France's third biggest mobile
operator Bouygues Telecom plans to cut 1,516 jobs or
17 percent of its staff to reduce costs to ensure its survival
in a market where prices are down by nearly one-third.
Olivier Roussat, who heads the telecoms arm of the
family-controlled conglomerate, also acknowledged on Wednesday
that the company had held talks with potential buyers - low-cost
player Iliad and market leader Orange - but
these were no longer ongoing.
"Obviously the talks did not succeed otherwise we would not
present this plan to remain independent," Roussat said. He
declined to give reasons for the failure of the negotiations.
"We are cutting costs to survive in a four-player market."
Bouygues Telecom has been the centre of deal speculation
since April, when it lost a bidding war for number two carrier
Vivendi's SFR to cable operator Numericable.
Two people close to the situation said the talks between
Bouygues and potential buyers had stumbled over price but they
did not rule out the possibility that these could resume at a
later date. Bouygues wanted a price of 8 billion euros ($10.89
billion), or 9 times 2013 operating profit, as a starting point
for talks with both Iliad and Orange, the people said.
One of the people said that such a price would not create
value once regulators imposed remedies to protect competition.
Iliad's initial informal offer was between 4 and 5 billion
euros, while Orange's could not be determined.
Bouygues shares closed 6.3 percent lower as consolidation
hopes deflated. They have risen almost 17 percent this year
boosted by a recovery in the construction and roads business and
investor hopes for potential asset sales.
Orange closed down 3.3 percent and Iliad 6.8 percent.
Iliad's arrival on the mobile scene in January 2012 sparked
the price war that is now increasing the pressure to
consolidate. Mobile prices fell 27 percent last year and 11
percent in 2012, according to the telecoms regulator.
Bouygues has been hardest hit because of its smaller size.
Its mobile market share declined by three percentage points and
its operating margin fell to 15 percent in the first quarter
from 22 percent in the same period in 2011.
Bouygues in March took the price battle to the fixed
broadband market with a TV, Internet and fixed-line phone bundle
at 19.99 euros a month, a move that analysts said was targeted
at Iliad, which has similar offers from 29.99 euros a month.
Bouygues' new commercial strategy will focus even more on
the fixed market, an area where it has long trailed rivals. It
plans to invest in its network to offer broadband directly to 16
million homes from 12 million currently instead of renting lines
from Orange. It will also invest more in faster fibre broadband
lines. Bouygues said capital expenditure on its network would
remain stable at around 500 million euros a year.
Alongside this, the job cut plan aims to save 300 million
euros a year by end of 2015.
Back-office jobs like marketing and information technology
will be targeted, while the roughly 4,500 people employed in
customer service and stores will remain untouched.
Bouygues cut 542 people via a voluntary scheme in 2012, but
this time there may be some compulsory cuts.
The mobile market's difficulties since Iliad's arrival has
led executives from the major telecom companies to call for
France's main competition regulator Bruno Lassere no longer
opposes this, and Industry Minister Arnaud Montebourg has openly
called for it to calm what he has called "destructive
Speaking at a press briefing on Wednesday, Lassere said he
had held discussions with all the operators in the past few
months as they considered various tie-ups. "I cannot give them a
formal opinion, but can provide my views and map out the
potential risks," Lassere said.
Having four operators is certainly better for consumers than
three, he said, but more important than the number is preserving
an aggressive "maverick" who forces price cuts.
"The telecoms market is at a turning point ... If
consolidation is inevitable, then we should prepare for it and
negotiate it effectively. The worst outcome would be that one of
the actors simply disappears because it can no longer survive."
($1 = 0.7345 Euros)
(Reporting by Leila Abboud and Gwenaelle Barzic; Editing by
Andrew Callus and Jane Merriman)