In detail, Bouygues Telecom would take over the entirety of SFR Business as well as 6.4 million retail customers.

Free would acquire the RED brand and its 6 million subscribers, while Orange would be allocated a portion of SFR customers along with the MVNOs. Assets not directly distributed among the buyers - fixed and mobile networks excluding Crozon, distribution, and information systems - would be held within an SFR structure owned equally by the three operators for at least 30 months to ensure operational continuity during the migration phase.

The transaction is expected to close in the second half of 2027, subject to regulatory approvals.

For Oddo BHF, the main positive surprise concerns synergies, now estimated at 2 billion euros per year in Opex and Capex, compared to the 1.5 billion euros previously assumed. These would be split 50% for Bouygues Telecom and 25% each for Orange and Iliad. However, it should be noted that an announcement of synergies does not guarantee their actual realization. Furthermore, Bouygues Telecom expects to capture 70% of these gains by 2032, with the full amount only realized by 2034.

'Conversely, integration costs appear significantly higher than expected. According to our estimates, they would reach nearly 6.5 billion euros, or approximately three times the amount of annual synergies, compared to a ratio typically close to 1.5x in sector M&A deals. Their distribution would be 42% for Bouygues Telecom, 30% for Iliad, and 28% for Orange', the research firm detailed.

Caution at AlphaValue

For Orange, the deal appears relatively costly: the group could spend up to 7.1 billion euros including the earn-out and integration costs, representing a higher multiple than those paid by Bouygues Telecom and Iliad. Value creation will therefore largely depend on an improvement in competitive conditions in the French market and a re-rating of telecom assets.

Bouygues Telecom appears to be the primary beneficiary of the deal, according to the research firm. The operator will invest 8.7 billion euros to take over SFR Business in particular and benefit from nearly 1 billion euros in annual synergies in the long term, a figure that exceeds expectations. 'Despite high integration costs and synergies that will not be fully realized until 2034, these more favorable prospects lead us to raise our valuation of Bouygues to 63 euros per share, up from 61 euros previously', Oddo specified.

AlphaValue, however, remains more cautious. The research firm points out that the French telecommunications market is characterized by some of the lowest prices in Europe, a situation largely linked to the competition between four operators. 'This looks challenging, as the French telecom sector is defined by very low price levels, which are politically essential when four operators are competing', it highlighted.