PARIS—When Iliad SA founder Xavier Niel made a last-ditch attempt this spring to buy a French rival to gain scale, his adversaries thought he was bluffing.

"We told them: Either you tell us you are really for sale, or we turn to other options that may make it difficult to come back to this later," Mr. Niel said, referring to his attempt to buy France's No. 3 telecom company, Bouygues SA's Bouygues Telecom.

On...