* Sees 2-5 pct revenue growth medium-term for merged company
* Synergies from deal worth 1 bln euros on annual basis
* To use SFR brand power to grow broadband, corporate sales
(Repeats to add link to graphic. No change to rest of text)
By Leila Abboud and Gwénaëlle Barzic
PARIS, March 17 The billionaire founder of
Numericable believes he can create a French "national
champion" by combining fixed-line and mobile telecoms services
following his cable firm's purchase of Vivendi's SFR
Speaking for the first time since winning a takeover battle
for SFR against Bouygues Telecom, Patrick Drahi said
on Monday the deal was a sign of "convergence" between fixed and
mobile telecoms operators.
Strengthening his point, British mobile phone group Vodafone
on Monday unveiled a 7.2 billion euro ($10 billion) deal
to buy Spanish cable operator Ono.
"Convergence of networks and of usage by consumers is
happening everywhere in the world," said Drahi, whose holding
company Altice also owns cable and mobile assets from
Israel to the Dominican Republic.
"We will create a French and European champion by marrying
two companies with very different histories and strengths," he
told a news conference.
In a saturated and cut-throat competitive European telecoms
market, firms are increasingly looking to offer a range of
services to customers to benefit from economies of scale.
Drahi, a little-known entrepreneur who has made his wealth
building European cable networks since the 1990s, emerged as the
underdog winner on Friday of a bidding war for SFR, despite the
fact that Numericable has annual revenue ten times lower than
the business it is buying.
Combining Numericable and SFR will create France's
second-largest player in both fixed-line telecoms and mobile,
behind Orange. Numericable believes its bundled offer
will have an edge over rivals because its cable broadband tends
to be faster than the ASDL connections used by most competitors.
Numericable won the battle for SFR despite opposition from
France's industry minister, who had openly favoured Bouygues and
criticised Drahi for skirting French taxes by residing in
Switzerland and basing his Altice holding company in Amsterdam.
Industry Minister Arnaud Montebourg said Bouygues' bid would
reduce the number of players in the French mobile market to
three from four and calm what he called "destructive
competition" that had sent prices down 20 percent in the past
two years and hammered profitability in the industry.
Vivendi picked Numericable's bid - which would give it 11.75
billion euros in cash and 32 percent in the resulting company -
because it offered more cash, posed fewer competition problems,
and provided a quicker exit from telecoms than Bouygues' bid.
As he laid out his plan for the new Numericable-SFR, Drahi
sought to reassure the government with pledges on jobs, keeping
prices stable, and using French vendors.
"We're here to create value for our company, and by doing
so create jobs and growth," he said.
On the financial side, Drahi laid out a strategy for the new
group that consists of using SFR's marketing muscle to sell more
high-speed broadband services over Numericable's network and
developing its business with corporate clients.
In the process, the combined group's average revenue per
user - Numericable's stood 8 euros higher than SFR's last year -
should climb, driving higher profits, he said.
Numericable-SFR, which would have 7 million broadband and
21.4 million mobile customers, would in the medium-term achieve
2 to 5 percent annual revenue growth, he forecast.
Drahi said he would be chairman of the new company, adding
it remained to be seen how many seats on the board Vivendi
representatives would be given. He also said it remained to be
seen whether SFR's current chief executive would have a role
alongside Numericable CEO Eric Denoyer.
Numericable also confirmed earlier reports the deal would
create cost savings of more than 1 billion euros per year by
2017. Synergies would come in part from migrating SFR broadband
customers to Numericable lines into the home, lower costs for
carrying mobile traffic on fixed lines known as backhaul, as
well as marketing and software systems.
It aims for 40 percent operating profit margins, compared
with SFR's 27 percent and Numericable's 47 percent last year.
Over time, the Numericable brand will be phased out in
favour of the SFR brand, Drahi added. "I see big growth in top
and bottom-line for this new company," he said.
Drahi said he had not set a dividend policy for the new
company and did not pledge to pay one.
The combined entity will remain based in Paris and will be
listed on the Paris stock exchange.
Drahi, who has lived in Geneva for more than a decade and
also has a home in Israel where he has business interests,
rejected a call from French Industry Minister Montebourg to
return to France for tax reasons. "My family is in Geneva," he
said. "I have no intention to bring them to Paris, although I
will be here as much as needed to run the business."
Vivendi shares were 0.5 percent firmer at 20 euros at 1555
GMT, while Numericable shares were little changed at 29.55
euros. Bouygues was trading 1 percent lower at 30.21 euros.
Morgan Stanley and JP Morgan advised Numericable on its bid
for SFR, which is being financed by a consortium of nine banks.
($1 = 0.7181 Euros)
(Editing by James Regan and Mark Potter)