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Orange and Bouygues Telecom Call Off Takeover Talks

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An attendee tries an Oculus-powered Samsung Gear VR headset at Orange’s innovations show in Paris. Credit Benoit Tessier/Reuters

Another European telecommunications deal has fallen apart.

On Friday, Orange, the former French telecom monopoly, and Bouygues Telecom, a local rival, called off takeover talks after failing to agree on a proposed deal worth 10 billion euros, or $ 11.4 billion.

The move is the latest in a growing list of mergers in the European telecommunications industry that have faltered after the region’s antitrust authorities raised questions about whether further industry consolidation would be in the best interest of customers.

Such concerns have already upended a number of proposed deals, including a prospective merger last year between two of Denmark’s largest telecom operators. Potential combinations, including a much-rumored deal between Vodafone, the telecom based in London, and Liberty Global, the cable company controlled by John C. Malone, have also failed to emerge.

Antitrust concerns were raised at the time of Orange’s proposed takeover of Bouygues Telecom in January, but both sides said on Friday that the failure to reach terms on the deal, and not potential competition issues, had scuttled the takeover.

In particular, Bouygues, a French conglomerate that owns Bouygues Telecom, said in a statement that it had failed to reach agreement on its stake in the new entity and on the valuation of the company’s telecom unit.

The company said it also had concerns about whether the deal would be approved by the country’s authorities.

Analysts expected Orange to sell off part of the enlarged entity to national rivals to win regulatory approval. It also remained unclear how much of a stake the French government, which owns a minority stake in Orange, would have retained if the takeover had been approved.

“In a market where the possibility of consolidation is now ruled out for the long term, Bouygues Telecom will continue its stand-alone strategy,” the company said in its statement.

In response, Orange said it would now focus on investing in its own telecom network across France.

The proposed deal would have created one of France’s largest telecom operators as the industry faces a cutthroat price war that has pitted Orange against upstart rivals like Iliad and Numericable-SFR.

Orange has more than 260 million subscribers worldwide, including roughly 28 million in France, while Bouygues Telecom has 14 million customers, all in France.

This is not the first time that Bouygues Telecom has been at the heart of takeover talks.

Two years ago, the company failed to acquire SFR, another French carrier, in a lengthy takeover battle with Altice, the Amsterdam-listed cable company that controls the French cable operator Numericable.

After months of negotiations, Vivendi, the owner of SFR, finally agreed to sell SFR to Altice for about €17 billion.

After Bouygues Telecom’s failure to acquire SFR, analysts said that it did not have the financial muscle to compete against better-financed rivals, including Orange.

In 2015, Bouygues Telecom also rejected a €10 billion takeover from Altice, whose owner — the French billionaire Patrick Drahi — has also expanded into the United States by acquiring the American cable operators Suddenlink Communications and Cablevision.

That 2015 deal would have combined two of France’s largest mobile providers — Numericable-SFR and Bouygues Telecom — to overtake Orange as France’s largest cellphone company.

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