The historic choice of Martin Bouygues was different

In tales of Grimm, three brothers, it is always the third the more malignant. The benjamin of the band exceeds the other, yet more strong, and pocketing the inheritance of the father or the heart of the beautiful. How to avert the curse of the puisne son by the dream. And sometimes the skill and intelligence may have because the more acquired situations. In the industry, it is somewhat the same thing, the last entrant has always heard his music.

Born four years after his elders, Bouygues Telecom is a little in this situation. When he arrives on the market of the mobile phone in 1995, its competitors France Telecom (concurrence become Orange) and SFR do not waited it. They have largely invested the place by building their network. Gold, in mobile telephony, even more than for fixed, water or electricity, the coverage of the territory is the first commercial argument, because it sells to the movement. We must therefore accept to spend much, before even to recruit the first customer. At the time, he settled a mechanical between size and profits correlation, because fixed costs are the same for everyone.

Fortunately, the small number of actors, limited by law or by the depth of the pockets of the participants, produces comfortable oligopolies generally ensuring good predictability income and future profits. It is also the case for Bouygues Telecom which has paid its first dividend in 2005 and the operating margin reached now 15.

Yet, the friendly club of mobile operators does not satisfy the small number three. It is certainly invited to this very small banquet, but must confine itself to a jump seat and a small base. Its market share is twice smaller (17) and its turnover is painfully at the level of the profits of its two competitors.

At the time, Bouygues Telecom finds itself stuck between, on the one hand, the regulator for telecoms, Arcep, which intends to protect the consumer in an attempt to regulate the market and, on the other, its two "big brothers" who know the nose when it shows a little too much ambition. Package, free terminal, unlimited communications, all commercial innovations are quickly repeated by the competition. Bouygues is, at the beginning of the 2000s, the bitter fact that market shares earned are quickly regagnées by competitors with their financial strength. Perhaps, a massive and long-term business investment could change the course of history to 1999-2000. To cross to Bouygues Telecom fateful threshold of 20 of the market and thus increase a few years more before its profitability profile.

The historic choice of Martin Bouygues was different. Heavily indebted, attacked in 1999 by Vincent Bolloré who wanted to force him to drop this activity, he is betting... prudence and resignation. Any reckless expenditure would have been in germ the risk of loss of control of the group by the Bouygues family. Where the observation a little depressing that the games are made. SFR and Orange with an interest obvious keep their competitor to its current market share in order to maintain its fragility. For Bouygues, the growth in telecoms is now the past.

Therefore, since he gave to catch up with its competitors, Martin Bouygues if it does not sit on the Board of Directors of its subsidiary, it does anyone else care strategic decisions has only two options: sell this activity to find another more carrier growth or become a niche player.

Everything suggests that a window of opportunity opened last year with the resumption of the mergers and acquisitions in the sector and the excellent results (favored by a pause in investment), with upgrading to the zenith. It is now closed. Why has the group not seized this opportunity Bouygues is not a holding of participation mediating between its assets permanently. It is an industrial group whose strategy is to rely on the cash generated by mature business to invest in new relays for growth. This was the case for Colas (road), and then to TF1 and, finally, to telecoms, the case of Martin. The latter is now looking for a new territory and made no mystery of his interest in nuclear power. But current activism funds and one-upmanship on Takeovers are the lower case to heights that are not compatible with the control that it intends to preserve its group. And then it is not easy to find activities that gross margin (Ebitda) flirts with 30 as in the case of the mobile. Exit therefore for the moment the hypothesis of an assignment.

Immediate enhancement is no longer the priority, Bouygues Telecom leaders had the green light to reinvest in network (UMTS) and the reconquest of the clients. Last shot: the introduction of a package of unlimited communications evening 20 hours every day and all fixed numbers or mobile, regardless of the operator. A true revolution to current offerings, generally restricted to a few numbers or to subscribers of the same operator. Somehow, such as Free Internet access, Bouygues breaks a taboo in forfaitisant fully telephone calls. Competitors are screaming to the daredevil, ensuring that profitability will be found.

Construction Group provides, in turn, that if in the short term the margin of the activity will be penalized this offer is extraordinarily powerful in terms of retention and attraction of large consumers. As it is in direct competition to the fixed telephone, it is, moreover, difficult to replicate for Orange to his house mother France Telecom. At opposite ends of the latter who swear more than in convergence, Bouygues Telecom is betting everything mobile and packaging. To accompany rather that fight the inevitable emergence of Internet telephony in mobile.

This will not shock the gives the mobile market but may term will provide an adequate pension for Bouygues to leave him time to find a new trade and finance. Then, only, it may say that the last is, as in the tales, the cleverer of the band.