Orange says European telecoms consolidation off for two years
Orange has ruled out the possibility of cross-border and big in-country consolidation in Europe’s telecoms industry for up to two years, arguing that antitrust authorities in Brussels had “put a hold” on any such hopes.
France’s biggest mobile operator by subscribers said recent decisions by Brussels had set a clear marker in spite of Orange’s insistence that mergers among the operators in Europe’s “highly fragmented” market would “probably gain in the medium term by being bigger”.
“It is clearly not on the agenda and when I say not on the agenda it is . . . for the next 12, 18 or 24 months,” said Gervais Pellissier, the group’s deputy chief executive and director of European operations.
Mr Pellissier’s comments come weeks after regulators in Brussels blocked Three’s proposed £10.5bn acquisition of rival operator O2 in the UK over concerns that reducing the number of operators from four to three would be damaging to consumers.
He said that the decision also had implications for domestic competition authorities, including in France where leading operators have unsuccessfully spent more than a year exploring merger options.
“There is no direct legal link but we cannot imagine a local antitrust authority going completely in the other direction . . . of the tone given at the Brussels level,” he said.
The recent collapse of talks between Orange and Bouygues Telecom, France’s third-largest mobile operator, erased industry hopes of reducing the number of competitors from four to three — a move considered essential to end a price war and lay the foundations for spending on infrastructure.
The talks were particularly complex because of the need to involve two other groups — SFR, controlled by billionaire Patrick Drahi, and Iliad, controlled by French entrepreneur Xavier Niel — to take on board disposals required to pass muster with the country’s competition authorities.
Mr Pellissier said the inability of the groups to find common ground torpedoed the talks. “We saw how they are unable to work with each other . . . the main reason why the deal failed is the lack of trust between the players,” he said.
Mr Pellissier’s comments came as the head of Verizon’s enterprise businesses in Europe said the EU should follow the US by taking a more “light-touch” approach to regulation to encourage investment.
“We’ve seen in the US that where there’s a light regulatory market, it has allowed for very significant investment, particularly around the infrastructure of broadband,” said Rich Montgomery. He added that he was not confident that efforts to create a digital single market would succeed.