France eases telecom merger stance as Bouygues back in play

A logo is seen in a retail store of French telecom operator Orange in Bordeaux, southwestern France, July 3, 2015. REUTERS/Regis Duvignau

PARIS (Reuters) - France's Economy Minister said he did not oppose in principle a consolidation of the country's telecoms sector to three operators from four, as state-controlled telecoms group Orange ORAN.PA started talks about possibly buying a stake in Bouygues Telecom BOUY.PA.

A source familiar with the situation told Reuters on Thursday that during a seminar with his board and executive committee on Monday, Orange chief executive Stephane Richard had mentioned new talks with Bouygues about the future of its telecom unit. Orange declined to comment.

“It is a first stage, the project is on the table again,” said the source, who added the discussions had focused on how to overcome any objections over antitrust issues.

A deal would reduce the number of telecom firms in France from four to three and would create a new giant that would have a 50 percent market share in fixed and mobile.

Economy Minister Emmanuel Macron had opposed a previous bid by European telecoms group Altice ATCA.AS to buy Bouygues, saying in June it could destroy jobs and risked creating a French operator that was "too big to fail".

Asked on Thursday whether he was still opposed to consolidation in the French sector following reports saying Orange was in talks with Bouygues to buy its telecom arm, Macron took a more accommodative stance.

“I had expressed an opinion on that offer which had emerged at the time,” he said, “but I’m not religious about the subject in general. It’s not a position of principle.”

French telecom firms have fought a drawn-out price war since low-cost Iliad ILD.PA joined the market a few years ago.

Reporting by Jean-Baptiste Vey and Gwenaelle Barzic; Writing by Michel Rose and Geert De Clercq; Editing by Andrew Callus and Mark Potter