Orange CEO tells government to stop meddling in telecoms sector
Stéphane Richard says politicians should be ‘more humble and cautious’ when talking about industry
Stéphane Richard, chief executive of France’s biggest telecoms group, whose largest shareholder is the government, said that decisions over mergers and acquisitions would be “essentially a topic for the French antitrust authority. The government has really no tools in its hands to prevent this”.
The Socialist government of President François Hollande disagrees. On Monday, Emmanuel Macron, economy minister, said it could block a $10bn bid by Numericable-SFR, the country’s second biggest mobile operator, for Bouygues Telecom, the third largest. He called the deal, which would create the country’s largest operator, bad for consumers, investment and jobs.
Mr Richard told the Financial Times before news of the bid became public that several government attempts to stop or influence takeovers, including General Electric’s acquisition of Alstom’s energy business and the sale of SFR to billionaire Patrick Drahi, whose Altice cable group controls Numericable-SFR, had largely failed.
“Our politicians should be maybe a little more humble and cautious about what they say on the industry,” he said.
“The industry is made up of private companies and, in fact, what we have to take into account is antitrust [and] the legal process. Political wishes or statements are not really something which is so important.”
The French government has a 25 per cent stake in Orange, which Mr Richard acknowledged makes running the company more difficult.
“When you have the state, everything is political so it doesn’t make life easier,” he said.
“I would not say that the shareholder is a frustrating shareholder that opposes every kind of move that we want to do. But, of course, from time to time it makes things a little more complicated.”
Earlier this year, the government stepped in as Orange was preparing to sell a stake in Dailymotion, its video portal, to PCCW, the Hong Kong telecoms group. The stake was instead sold to Vivendi, the Paris-based media group controlled by Vincent Bolloré.
“The government expressed a preference both from a shareholder point of view and from an industrial policy point of view,” Mr Richard said.
But he added: “At the end of the day Orange’s interests, and our shareholders’ interests, have probably been better defended with the final deal than with PCCW.”
Mr Richard, who was chief of staff at the economy ministry under the previous centre-right government of Nicolas Sarkozy, stressed that the state had not stood in the way of his group’s other moves, such as its acquisition of Jazztel, the Spanish operator.
He also promised that Orange would continue to take a leading role in creating pan-European networks through acquisition, and suggested a number of smaller former incumbents — including KPN, Telecom Italia and Belgacom among them — could be vulnerable if Europe were able to create a single digital market.
“I don’t know when or what, but I am in favour of an ambitious Orange in Europe. We are looking, we are paying attention to everything going on,” he said.
Orange is also keen to expand in other markets, including in Africa and the Middle East, a region where Mr Richard found himself enmeshed in controversy in recent weeks.
He has just returned from a trip to Israel, where he was forced to explain why he said he wanted the company to quit the country because its presence there was a “sensitive issue” in other markets. Benjamin Netanyahu, the country’s prime minister, called on the “French government to publicly repudiate the miserable statement and miserable action by a company that is under its partial ownership”.
Mr Richard insists that his comments were misreported and misinterpreted, adding that his family and home needed extra security following threatening calls and emails. But he says that just four of its 27m French customers left the business in the wake of the controversy.
The company has meanwhile turned its African business into a separate corporate vehicle which Mr Richard said was both to create a simpler structure that would provide better visibility and enable the group to be floated or partially sold to minority shareholders.
Mr Richard is also open to selling its telecoms mast infrastructure in countries outside France given the emergence of European tower companies searching for deals in recent months.
However, Mr Richard ruled out selling the company’s holding in BT. Orange was given a 4 per cent stake in the UK telecoms group as part of the £6bn price it received for its half share in EE, the mobile operator. Deutsche Telekom, which jointly owned EE with the French group, is believed to be interested in buying the stake but Mr Richard says he wants Orange to retain it for its long-term European plans.
Mr Richard describes Orange as a key “player” in the region. “Do we want to be a big pan-European player playing consolidation in Europe or not? In my view, we have a clear opportunity.”