* Bouygues to hold 42% of SFR, Iliad 31%, Orange 27% if

deal proceeds

* SFR's fibre network and overseas assets excluded from

current offer

* Bouygues shares fall 1%, Orange rises 0.5% after bid

announcement

By Gianluca Lo Nostro and Leo Marchandon

April 17 (Reuters) - French telecoms operators Bouygues

, Iliad-Free and Orange said on Friday they

had made an increased 20.35 billion euro ($23.97 billion) bid to

buy SFR from billionaire Patrick Drahi's Altice France.

If it goes ahead, the proposed deal would shake up one of

the most competitive telecoms markets in Europe as operators in

France have been engaged in a price war for several years,

pressuring margins and revenue growth.

It would also represent the largest telecoms acquisition in

France since France Telecom's $37 billion acquisition of Orange

from Vodafone ( VOD ) in 2000.

Altice France CEO Arthur Dreyfuss and SFR CEO Mathieu Cocq

confirmed in a letter to employees seen by Reuters that

exclusive talks were under way with the trio. Altice had

rejected an earlier 17 billion euro offer in October.

Any deal would be subject to consultation with the relevant

employee representative bodies and would then need clearance

from antitrust authorities, the bidders said, adding that an

exclusivity period for negotiations lasts until May 15.

The proposed deal would give Bouygues Telecom a 42% stake in

SFR, with Iliad and Orange taking 31% and 27% respectively.

Other assets, mainly fibre network ones and SFR's operations in

French overseas regions, are not included in the offer.

Each operator acquiring a portion of SFR will undergo a

separate antitrust review, an Orange spokesperson told Reuters.

Bouygues shares were down around 1% following the

announcement, while Orange's rose around 0.5%.

($1 = 0.8488 euros)