The Chief Executive of Orange, Stephane Richard, has said that a merger between the company and it’s French rival Bouygues would have to bring value to the company and safeguard jobs within the sector. The company is holding talks to decide whether to purchase Bouygues Telecom for approximately 10 billion Euros in shares and cash. The deal would see Bouygues receive a 15 per cent stake in Orange and the rest of the money in cash.
Merging the two companies would see the amount of mobile operators in France reduce from four to three, creating a new giant company which would hold a market share of almost 50 per cent in both mobile and landline communications.
Richard said that the merger should ‘create value’ for Orange and boost future investments within the French telecoms sector when speaking at a press conference in Paris. He also said that the initial negotiations were started by the CEO of Bouygues. He said that he was not willing to put the company through a risky deal and that he did not expect the negotiations to last for more than a few weeks. Reassuring customers, he said that the deal would not have any negative impact on consumers.
The merger, in Richard’s mind, was required to develop investments in infrastructure and allow French telecoms companies the chance to compete with their European peers. The negotiations do not involve the Bouygues television channel. Mr. Richard said that regardless of the outcome of merger talks, the French state would stay as the main shareholder in Orange. Current issues in the negotiations include worry over jobs, investments in infrastructure and fibre optic networks. The Orange CEO said that he anticipated that the deal would be screened by the French Competition Authority as opposed to the European Commission.
The deal would mean that France would return to having three mobile phone networks, just four years after Iliad Free Mobile launched in the country, introducing a lower cost plan and sparking the start of a price war between networks. The concerns over competition if the merger takes place would allow the other mobile operators to pick up assets if the two companies are required to dispose of some in order to create a fairer market.
A French newspaper reported that the mobile telecom operator Coriolis was interested in taking over the business division of Bouygues if the opportunity arose.
In the UK, Orange has already seen the impact of a merger. It merged with T Mobile several years ago to form EE, one of the largest mobile phone and broadband networks in the UK. At first, Orange retained its own brand name as part of EE but eventually this was phased out. One damaging part of the merger for customers was the end of Orange Wednesdays- an offer where each Wednesday, an Orange customer could take advantage of 2-for-1 cinema tickets. It was incredibly popular and there was uproar when Orange announced they would no longer be producing the offer.
To find out more about Orange, call Orange customer services.