Debt Forces SFR Break-Up

Altice France was built on the assumption that cheap money would last. Patrick Drahi borrowed heavily to assemble a telecoms empire across France, Portugal and the United States between 2014 and 2016. That model has now run into the same eurozone reality Maltese borrowers know well: when interest rates rise, yesterday's easy financing becomes today's problem.

SFR, France's second-largest mobile operator and the most valuable piece of Drahi's empire, is now set to be divided among its three remaining rivals: Orange, Bouygues Telecom and Free. The 25 million people who pay SFR for mobile service did not create the debt crisis. They may still end up paying for it.

How rising rates broke the machine

Drahi bought SFR from Vivendi in 2014 for about €17 billion, financed largely through high-yield bonds, meaning debt that offers lenders higher interest because it carries higher risk (Swissinfo). The formula was simple: borrow cheaply, buy operators, cut costs, refinance and repeat.

It worked while ECB rates stayed close to zero. The ECB, which sets interest rates for the 20 euro countries including Malta, then raised rates by 4.5 percentage points in 2022–2023. Altice France's debt, which had peaked above €24 billion, became impossible to carry on the old terms (IFR, NautaDutilh).

Credit agencies pushed the company's rating deep into junk territory (Cbonds). A court-supervised restructuring completed in late 2025 forced creditors to accept less than they were owed, removing billions from the balance sheet (Ropes & Gray). Drahi's personal fortune, once estimated at nearly $22 billion, was cut to a fraction of that (Crain Currency). Selling SFR is the way to pay down what remains.

Fewer operators, higher bills: Europe's track record

The deal would reduce France's mobile market from four operators to three. For SFR customers, the practical question is whether their monthly bill goes up.

Europe's record points in that direction. BEREC, the body that brings together European telecoms regulators, found that comparable four-to-three mergers pushed prices up by 10–15% (BEREC). A CEPR study reached a similar conclusion: consolidation raises prices without reliably delivering the extra investment used to justify it (CEPR VoxEU).

France has already shown what happens when competition moves the other way. When Free entered the market as a fourth operator in 2012, mobile prices fell 11.4% in that year alone (ARCEP data via Rude Baguette). Average monthly bills dropped from €27.30 to €14.30 over the following decade (Telecoms.com). Free, the company whose arrival forced prices down, is now one of the three buyers expected to absorb SFR and remove the fourth player.

Portugal tells the same story from the other side. Romanian operator DIGI entered the Portuguese market in late 2024 with mobile plans starting at €4 per month. By spring 2026, telecoms prices in Portugal had fallen 2.2% year-on-year (ANACOM via Tek Sapo). More operators tend to pull prices down. Fewer operators give the survivors more room to raise them.

A test with no easy remedy

Approval is not automatic. The French competition authority has up to 18 months to decide, and the European Commission may intervene. Draft merger guidelines under Commissioner Teresa Ribera give more weight to "resilience" and investment capacity (EC). But the Commission has never approved a four-to-three telecoms merger without requiring a credible new entrant. In Spain, that entrant was DIGI. In Italy, it was Iliad. In France, there is no obvious candidate.

That is the weak point in the deal. If regulators cannot find a fourth operator willing to enter, the choice becomes blunt: block the merger, or approve it while knowing that similar cases have led to higher prices. For 25 million French mobile subscribers, that decision will not be theoretical. It will appear on the next bill.