Orange gives Stephane Richard 4 more years

Orange's board of directors has renewed CEO Stephane Richard's tenure, after apparently heeding a warning about destabilising the France-based operator if he was replaced.

Stephane Richard, France Telecom Orange

Orange CEO, Stephane Richard

The board voted in favour of renewing Richard's contract for a further four years at a meeting held on Wednesday, and also approved 14 resolutions for the company's future--details of which will be published on April 2. The board's decision to keep Richard at the helm must still be approved by shareholders at the company's AGM in late May. However, the board's backing clears one potential hurdle to the CEO's reappointment.

Richard warned the company could be destabilised by replacing him, in a recent interview with French newspaper Les Echos.

A fresh tenure for the CEO was in doubt after he was charged with fraud in relation to his involvement in a French government arbitration settlement to a backer of former French president Nicolas Sarkozy, while Richard held a senior position in the finance ministry in 2008.

The CEO told Les Echos the incident was not Orange's concern, and said it would be illogical to destabilise the company by replacing him because of the matter.

Richard has guided Orange through several tough years since his appointment in 2010, characterised by declining revenues in core European markets, and fierce competition in France, where Free Mobile has shaken up the mobile sector with low-cost tariffs.

Orange's revenues fell €1.9 billion year on year in 2013. However, the company limited the damage of that decline by shedding nearly €1 billion in costs during the year. Richard said Orange aims to stabilise its earnings during 2014, after generating EBITDA of €12.6 billion ($17.3 billion) in 2013, and limiting a drop in EBITDA margin to 1 percentage point.

The company faces several challenges in the remainder of 2014, chief among which is the potential change to its domestic mobile market. Media group Vivendi is currently in negotiations to sell its mobile business SFR, which could see a new fixed and mobile powerhouse emerge if the offer from Altice and Numericable is accepted. A merger of SFR with Bouygues Telecom would cut the number of mobile players in France from four to three, and is therefore the preferred option of Orange.

Orange is also reviewing its emerging markets strategy. The operator is considering selling its business in Kenya due to regulatory problems, and is also taking a hard look at its Ugandan operation.

Furthermore, the operator faces some tough decisions in Spain, where Vodafone's plan to acquire cable operator Ono has turned the spotlight on Orange's fixed-line strategy in the country. The company originally agreed a deal with Vodafone to deploy fibre to the home to 6 million homes in Spain--3 million homes each. However, Vodafone is likely to cut its commitment to 1.5 million homes if the Ono acquisition clears the regulatory process as would then have access to Ono's current cable network.

For more:
- see the Orange announcement

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