What's going on?

D�sol� �is a good summary of how investors in French telecom stocks were feeling on Monday as almost �8 billion worth of value was wiped from Orange, Bouygues, SFR and Iliad. It all happened because of a breakdown in merger negotiations between Orange and Bouygues.

What does this mean?

There�s been a huge amount of competition between telecom operators (a.k.a. mobile phone service providers) in France in recent years � and the price war has weighed on the profits of such companies. Investors were hoping that there would be consolidation in the sector (i.e. companies would merge or buy one another) and companies could regain some pricing power over their customers. But the inability of the two French giants to come to an agreement sparked wider discontent amongst investors who were expecting all four major French firms to benefit (Iliad and SFR would have likely bought parts of Bouygues business and gained an increased share of the French market).

Why should I care?

For you personally: Competition usually means a lower price for the average person. The good news for French people is that the price war between telecom providers shows no sign of abating. The lesson for the rest of us is that lots of competition usually leads to lower prices for you, the consumer � but often lower profits for the companies involved (and that�s true of most sectors, not just telecoms).

For the stocks: Most French telecoms were down about 15%. Orange was the out-performer of the bunch, down �only� 6%. That shows you A) that investors thought there was a high likelihood of a deal getting done (the fact they were in negotiations was well known), and B) how bad the lack of a deal is for the sector.