Orange to be vigilant over SFR deal competition impacts - CEO
Orange [EPA ORA] has no preference over which of the two bidders for Vivendi’s [EPA VIV] French telecoms division SFR eventually buys the asset, but will be vigilant over any potential competition impacts of the deal, said CEO Stéphane Richard.
It will be important to see what remedies will be offered especially with regards to “spectrum resources”, Richard said at a press conference for the presentation of the French telco’s 2013 results.
Mobile operator Bouygues Telecom and fixed line internet provider Numericable [EPA NUM] both presented bids for SFR yesterday, Wednesday. While the Numericable deal would not impact the competition among mobile network opeators, the Bouygues one would likely be “more disruptive” as it would reduce the number of operators in France from four to three, Richard said.
“Consolidation is a positive move which we support but we don’t want it to result in competition imbalances,” he said.
The fact that both offers came from French companies justified his prior calls for the need for consolidation in the telecoms market, Richard said. But he added that one couldn’t be “dogmatic” on the reduction of four operators to three and that each case was different.
Besides the impact on competition, Richard said he would also look closely on the impact the deal would have on employment and investment, especially in the rollout of new fibre networks.
Orange’s strategy remains that of being the leader in France in both fixed line and mobile, he added.
The company also wants to participate in consolidation processes in other European jurisdictions where it is based. But any acquisition would be selective and would keep in mind the company’s objective in reducing its leverage ratio from its current 2.37x to around 2x in the medium term.
Richard dismissed that the company would seek to raise new capital via a rights issue in order to support an acquisition.
We don’t have the financial means that Vodafone [LSE VOD] has but we have other possibilities without resorting to a rights issue, he said.
The company could be “creative”, he said, and has strategies that allowed it to be present in consolidation processes “without spending a lot of cash”.
He added that Vodafone’s strong cash position, resulting from its sale of Verizon Wireless, could only impact Orange in Spain.
“But the large Countries were Vodafone could have growth ambitions, we are not present. I am thinking of Italy and Germany,” he said.
Orange was recently rumored to be considering a bid or Spain’s Jazztel [MCE:JAZ], following a failed bid by Vodafone for Spanish cable company ONO.
A Spanish sector source told this service that Orange had little appetite to bid aggressively in Spain, but if it were to focus on Spain, Jazztel would be its highest priority.
Orange would be much less likely to make a play for ONO, the banker and a person close to Orange said. The person added that Orange could also consider Yoigo.
As there is movement in the telco market in Spain, with a possible sale or IPO of ONO, “everyone was talking to everyone”, the person said.