Just before the holidays, one of Europe’s biggest merger sagas of 2025 and the defining history of the continent’s telecoms industry came back to life as new interest emerged in France’s SFR.
In mid-December, French media reported that Altice France had been presented with at least four non-binding offers for parts of the operator’s network. This is likely to push Bouygues Telecom, Iliad (Free) and Orange to increase their initial offer.
The battle for Patrick Drahi’s French gem, Patrick Drahi’s Altice Group, is at odds with a broader EU push to encourage consolidation to boost investment, innovation and competitiveness – an agenda that has already fallen significantly behind. With the French trio still holding off on a second offer, the SFR deal will be highly significant as we enter 2026 and has the potential to trigger a much-needed wave of consolidation in Europe’s fragmented telecoms sector.
Summary of Patrick Drahi’s SFR Gambit
The SFR takeover story began last October, when SFR’s three French competitors put on the table a joint €17 billion offer for most of the operator’s assets. Patrick Drahi, chief executive of SFR parent company Altice, rejected the request within hours, believing it fell far short of his expectations, and then distributed an information memo to demonstrate the strength of SFR’s networking arm, NetCo, and its division, SFR Business. With this smart play, Drahi has signaled to Bouygues, Illiad and Orange that he is paving the way for a higher price.
Although Drahi quickly rejected their offer, the telecom trio has not lost interest in acquiring SFR via the planned three-way split – a deal that could be better received by national and EU competition authorities. In late November, Iliad chief executive Thomas Reynaud said the rejection was entirely expected, while Aude Durand, Iliad’s number two, told the Wall Street Journal weeks later that the consortium’s proposal still had “real potential” and was “well-suited to current market conditions.”
Privately, the numbers were already moving. Although a proposed new offer has not emerged before the New Year, sources close to the consortium have admitted that the first offer was “somewhat low” and that their peak valuation is now around €19 billion, implying a total value for SFR of around €23.7 billion – just above the minimum value that Patrick Drahi and his fellow shareholders are willing to accept.
As potential buyers weigh their next move, Drahi has initiated a parallel sale of SFR Business – a move intended to increase pressure on Bouygues and Free, who plan to divide these corporate activities between themselves. Four investment funds have now made non-binding offers for parts of NetCo, SFR’s network backbone. As one insider put it, if SFR Business is sold, “there’s no deal for us anymore,” making Drahi’s influence unmistakable.
Learning from international consolidation experience
As SFR negotiations continue to progress, the French telecommunications sector should look far beyond its own borders for guidance. What matters is whether the SFR deal increases competition, unlocks investment and improves service for consumers. International experience shows that well-managed consolidation can achieve all three goals without entrenching complacent national champions.
The form of the SFR deal has clear international precedent. A large national operator preparing to transfer large parts of its business to its three largest competitors was exactly what Brazil experienced in 2020 with Oi. At that time, Oi decided to sell its mobile network, customer base and spectrum to TIM, Vivo and Claro for around 2.7 billion euros as part of a major restructuring. This three-party split is now widely considered a benchmark transaction and is being closely scrutinized by French operators as they weigh their own strategic options.
Crucially, the Brazilian result was far more balanced than many had expected. According to Oliver Wyman, Vivo strengthened its leadership position by gaining four market share points in a year, while Claro added six and TIM five. However, neither provider was able to gain a decisive edge as competition remained robust and differences between operators narrowed, while both average revenue per user and growth across the market improved. The lesson for France is that consolidation, with the right model, can strengthen an industry without distorting it.
Equally important was the regulatory framework that came with the Oi deal. In particular, the Brazilian competition authority only approved the transaction against firm commitments to investments and the 5G rollout. “Concentrating the market on three players has significantly expanded coverage and enabled nationwide 5G rollout,” says Emmanuel Amiot of Oliver Wyman, adding that “Brazil has achieved the strongest 5G penetration in the world alongside South Korea and is now the third-ranked country in speed.” Five years later, the transaction is still considered a success.
EU competition support at a crossroads
Brazil’s decision to link consolidation to mandatory 5G investments offers Europe a reality check. More than a year after Mario Draghi warned that the EU was losing its own competitiveness, Brussels is still struggling for funding. The European Commission has now proposed a European Competitiveness Fund to bring Draghi’s vision to life. But as Politico reported in December, the €450 billion spread over seven years would still cover less than a tenth of the investment gap identified by Draghi.
In his landmark report on the future of European competitiveness, Draghi made it clear that consolidation and scaling in strategic sectors such as telecommunications are essential if Europe is serious about innovation. With 5G forming the backbone of everything from artificial intelligence to advanced manufacturing, under-investment in networks has become a direct constraint on Europe’s long-term growth. Although the Commission has often talked about modernizing competition policy to reflect this reality, its credibility now depends on whether it is willing to apply this logic to real transactions rather than limiting it to speeches.
While Patrick Drahi and his shareholders have yet to agree on the terms of SFR, Iliad, Orange and Bouygues have left little doubt about their determination to complete a deal. If this is the case, French and EU regulators should be prepared to act quickly, drawing on Brazil’s plan as well as the experience of much more consolidated markets in the United States and China. If Europe wants a world-class digital infrastructure, it must finally let consolidation take effect.
