Numericable offered 10.9 billion euros and a 32 per cent stake in the new merged company for Vivendi's SFR, currently France's second-largest mobile network.
But the original deal was revised on Friday as Vivendi decided to enter into exclusive negotiations with Altice for a payment of 11.75 billion euros and 32 per cent stake.
Numericable faced competition from Bouygues, which offered 11.3 billion euros and 43 per cent of the new company, valuing SFR at 15.5 billion euros.
Industrial Renewal Minister Arnaud Montebourg, who supported Bouygues's bid, said the choice "poses a certain number of problems and questions".
"There is a tax problem because Numericable has a holding in Luxembourg" and its chairman Patrick Drahi has "personal holdings in Guernsey in a tax haven of Her Majesty the Queen of England" and that "he himself is a Swiss resident."
Altice said Numericable is listed in France where it is also headquartered but Montebourg said to Europe 1 radio that "Mr Drahi will have to repatriate all of his possessions and assets to Paris, to France."