The French mobile market could witness new M&A attempts following this year’s upcoming 4G spectrum auction, Orange (EPA:ORA) CEO Stephane Richard has said.
In June, conglomerate Bouygues turned down private equity-style telco Altice’s €10bn takeover offer for perennial target Bouygues Telecom. At the time, observers told TelecomFinance that four-to-three consolidation was likely on hold until after the 700MHz process was complete. Until then, they said, key factors included how aggressively Iliad bid on spectrum, how well Numericable-SFR performed as a combined company, and whether Altice pursued further M&A outside France.
In an interview today with Les Echos, Richard noted that four-to-three consolidation is underway in all of Europe’s leading markets – apart from France, which is home to the continent’s “weakest margins”.
Orange, he added, is in a strong position, unlike its three rivals. Altice-owned Numericable-SFR is losing customers, Bouygues Telecom is on the up [having added 312,000 new customers in H1 2015] but remains under financial constraints, while Free’s network requires massive investment.
Europe will first consolidate on an in-country basis, he said, ahead of a second, cross-border phase that would however require a truly single European telecoms market. The continent, he declared, cannot play on a national market level when web giants are playing at the global level – repeating European incumbents’ long-running plea for lighter-touch competition rules.
Once this single market emerges, Orange will play a role in consolidation, alongside Deutsche Telekom and Vodafone. “Our ambition over the next ten years is to continue to work towards becoming a leading operator in both Europe and Africa, realising an 11% rise in turnover and accelerating growth.”
Denying that having the state as a shareholder represented an obstacle to progress, Richard instead described it as “stable, long-term, benevolent and open”, protecting the company from hostile takeovers. French Economy Minister Emmanuel Macron was one of the strongest voices to come out against the Altice/Bouygues offer, saying he preferred to maintain a four-player market.
Asked for his thoughts on Altice, Richard said he admired founder Patrick Drahi’s audacity, but warned that the group had much to prove, especially giving their “collection of assets” some coherence, resolving its high debt levels, and demonstrating that there was more to their industrial strategy than cost cutting.
He emphasised that Altice was not the only telco investing in media – pointing to the UK’s BT – but said that given France’s Autorité de la Concurrence’s strict conditions on content ownership, it was safer for Orange to focus on investing in its own network.