Orange CEO calls on rivals to drive consolidation in France

Orange CEO Stephane Richard said the operator is still prepared to take part in consolidating the French mobile market in order to reduce pricing competition, but called on the operator's rivals to take the lead because Orange does not want to take a driving role.

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Orange CEO - Stephane Richard

Orange last week confirmed that it had, so far, been unsuccessful in reaching an agreement with a rival operator on a possible merger, and appeared to rule itself out of consolidation talks for the time being. Bouygues Telecom is understood to have been the target of recent acquisition talks by Orange and rival Iliad.

Speaking on the sidelines of a political and economic event in France over the weekend, Richard made it clear that Orange still believes consolidation is necessary in France as the country does not have the "critical size" to support four full fixed and mobile operators.

At the same time, Orange plans to take a back seat in any consolidation talks, saying this should be the responsibility of SFR, which is in the process of merging with Altice-controlled Numericable, Bouygues Telecom, which lost out to Altice in the battle to buy SFR, or Iliad, the owner of start-up Free Mobile that started the mobile price war in the first place. Richard made it clear that he believes Orange is not best placed to pursue consolidation because it is the largest operator and would face stiffer European Commission regulatory conditions.

"Between Bouygues, Iliad and SFR-Numericable, we still have room to see some manoeuvre," Richard told Bloomberg. "I hope that this will happen and we are still ready to take a part in this game of consolidation, because it's a necessary move for the consumers, for investment and for the country."

The acquisition of SFR from Vivendi by Numericable is putting further pressure on the existing operators as it will maintain the number of mobile operators at four, and also see a strong cable operator merge with a mobile operator to create a new fixed and mobile powerhouse on the French market. Numericable has also just agreed to buy Virgin Mobile France from Carphone Warehouse and the Virgin Group for €325 million ($443.8 million).

This pressure especially applies to Bouygues Telecom, which has suffered the most from the low-cost mobile tariffs introduced by Free Mobile in January 2012. The operator is now preparing itself for a future in a market with four mobile network operators, and its plan includes around 1,500 job cuts.

The French government has also called for a reduction in the number of mobile operators from four to three in order to create a less cutthroat pricing environment and save jobs.

Meanwhile Richard also said at the same event that he sees possible acquisition targets in Spain.

For more:
- see this Bloomberg article
- see this separate Bloomberg article
- see this Reuters article
- see this Wall Street Journal article

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France rolls up its sleeves to avert planned Bouygues job cuts