Orange CEO says Bouygues merger would have to create value

PARIS: Orange Chief Executive Stephane Richard said on Tuesday that a merger with rival French telecoms operator Bouygues would have to create value for the company and safeguard jobs in the sector.

Orange is in talks to buy Bouygues Telecom for about 10 billion Euros ($10.9 bln) in cash and shares, in a deal which could see Bouygues receive a 15 percent stake in Orange valued at 8 billion Euros, and the rest in cash.

The tie-up would reduce the number of mobile operators in France from four to three, creating a new giant with a market share of close to 50 percent in mobile and fixed-line communications.

“The merger must create value for Orange and boost investments in the French telecoms sector,” Richard told journalists at a news conference in Paris, adding the negotiations were started by Bouygues’s billionaire CEO Martin Bouygues.

“I will not engage Orange in a risky deal,” Richard said, adding that he did not expect a protracted negotiation lasting months but saw it concluding within weeks.

Richard said the potential deal would not have any negative impact on consumers.

He said the tie-up and consolidation in the French telecoms market was needed to stimulate investments in infrastructure and also enable French telecoms firms to compete with European peers.

He added that the negotiations did not involve any talks over Bouygues’ TF1 television channel.

Richard said that whatever the outcome of the merger talks, the French state will remain the leading shareholder in Orange.

The most contentious issues in the negotiations are over jobs, investments in infrastructure and especially fiber optic networks, and antitrust-related disposals, a source familiar with the matter had told Reuters.

Richard said he expected the deal to be screened by France’s competition authorities rather than the European Commission.

A deal would mean a return to three mobile operators in France four years after the arrival of Iliad’s Free Mobile low-cost services led to a protracted price war.

Competition concerns over a tie-up between Orange and Bouygues could, however, allow Numericable-SFR and France’s fourth-biggest mobile network operator, Iliad, to scoop up assets if disposals are required.

Mobile telecom operator Coriolis said on Monday it was interested in taking over the business telecommunications arm of Bouygues Telecom, Les Echos newspaper reported.