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Bouygues merger must create value, says Orange

Staff Writer
By Staff Writer, ITWeb
Paris, 13 Jan 2016
Orange CEO Stephane Richard expects the Bouygues deal to be screened by France's competition authorities.
Orange CEO Stephane Richard expects the Bouygues deal to be screened by France's competition authorities.

Orange chief executive Stephane Richard said yesterday 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 EUR10 billion ($10.9 billion) in cash and shares, in a deal which could see Bouygues receive a 15% stake in Orange valued at EUR8 billion, 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% 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 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 the negotiations did not involve any talks over Bouygues' TF1 television channel.

Richard said 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 fibre-optic networks, and anti-trust-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.

Cellcom Liberia acquisition

Orange yesterday disclosed it has entered into a firm agreement with Cellcom Telecommunications to acquire, through its subsidiary Orange C^ote d'Ivoire, 100% of Cellcom's Liberia subsidiary, the top mobile operator in Liberia, with the strongest market commercial momentum.

Orange will provide its marketing and technical capability to further strengthen the network operator, enhance services to consumers and contribute to the economic growth of Liberia, it says.

Cellcom's founders and employees will remain involved in the business to ensure a smooth integration, support performance and continue long-standing relations with the Liberian government.

This purchase is part of Orange's international development strategy to accelerate its growth by entering new emerging markets with high potential. This will enable Orange to strengthen its position in Africa, a strategic priority.

Liberia has a mobile penetration rate of 66%, lower than in many neighbouring countries.

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