Daily Management Review

Value Would be Created for Orange and Jobs Would be Secured by Orange – Bouygues Merger: Orange CEO


Value Would be Created for Orange and Jobs Would be Secured by Orange – Bouygues Merger: Orange CEO
A merger between the French telecoms operator Bouygues and rivals Orange would have created value for the latter and safeguard jobs in the sector, said Orange Chief Executive Stephane Richard said on Tuesday.
In a possible deal which could see Bouygues receive a 15 percent stake in Orange valued at 8 billion euros, and the rest in cash, Orange is reported to be in talks to buy Bouygues Telecom for about 10 billion euros ($10.9 bln) in cash and shares.
The merger would create a new giant with a market share of close to 50 percent in mobile and fixed-line communications as it would also reduce the number of mobile operators in France from four to three that would help both the companies financially as well as retaining the jobs in the two respective companies.
"The merger must create value for Orange and boost investments in the French telecoms sector," Richard told journalists at a news conference in Paris. He added that the negotiations were started by Bouygues's billionaire CEO Martin Bouygues.

"I will not engage Orange in a risky deal," Richard said.

He is expecting the deal to be closed down in a few weeks and does not expect a protracted negotiation lasting months, Richard added.
Consumers would not be affected in any negative manner due to the potential deal, he said.
Richard is of the opinion that there is need to stimulate investments in infrastructure and also enable French telecoms firms to compete with European peers and the potential tie-up would consolidate the French telecoms market.
Bouygues' TF1 television channel was out of the negotiating talks, he added.
The French state will remain the leading shareholder in Orange despite the result of the talks and the potential tie-up, Richard said.
While no confirmation was available from any of the two companies, sources close to the companies said that jobs, investments in infrastructure and especially fiber optic networks, and antitrust-related disposals were the most contentious issues in the negotiations and no outcome could be achieved without gaining clarity over these issues.
France's competition authorities – instead of the European Commission is expected to screen the deal, according to Richard.
Four years after the arrival of Iliad's Free Mobile low-cost services led to a protracted price war, the potential deal would for the first time mean a return to three mobile operators in France.
However, Numericable-SFR and France's fourth-biggest mobile network operator, Iliad could be allowed to scoop up assets if disposals are required over competition concerns related to the tie-up between Orange and Bouygues.
There were newspaper reports on Monday that Mobile telecom operator Coriolis was interested in buying over the business telecommunications arm of Bouygues Telecom.

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