Orange is eyeing future acquisitions of Europe’s smaller incumbents, including Telecom Italia, Belgacom and Holland’s KPN, Deputy CEO Gervais Pellissier has said.
Predicting a new round of in-country and cross-border European consolidation “in…
Orange is eyeing future acquisitions of Europe’s smaller incumbents, including Telecom Italia, Belgacom and Holland’s KPN, Deputy CEO Gervais Pellissier has said.
Predicting a new round of in-country and cross-border European consolidation “in the next five years”, he told press that the smaller groups could “for sure” be potential targets for the French incumbent.
Earlier this year, Orange CEO Stephane Richard noted the attractiveness of a potential tie-up with Telecom Italia, only to backtrack shortly afterwards when announcing the company’s three-year strategic plan.
Telecom Italia has long been considered a takeover target for incumbents and entepreneurs alike, but has so far refused foreign advances. KPN, having sold Belgian unit Base but retaining a 20% stake in Telefonica Deutschland, is now seen as simpler and more attractive. Belgacom, now a cleaner target for most likely buyer KPN, has indicated that it is not interested.
Advisers widely predict that following the current round of four-to-three transactions, Europe will eventually be dominated by Orange, Deutsche Telekom, Vodafone and Telefonica, along with quasi private equity firms Liberty Global and Altice.
“Once one or two [acquisitions of incuments] have taken place, there will be a trend,” one banker told TelecomFinance. “No one is desperate to pay for synergies. The model is not clear, and this has not worked in the past”.
TDC of Denmark is another potential target, bankers have said, noting however that its past private equity owners have already taken out a lot of the cost. Ireland’s Eircom, which has also passed through private equity hands, recently rebuffed a takeover offer.
European Commission officials have also favoured consolidation, but prefer this to be cross-border rather than domestic, with a view to creating enough European champions to promote competition.
Meanwhile, in France, four to three consolidation is yet to take place, with Bouygues Telecom owner Martin Bouygues still resisting offers from Xavier Niel’s Iliad and Altice-owned Numericable-SFR. Describing the current situation as “not sustainable in the long term”, Pellissier said: “The only one not for sale in the French market is us”.
