Orange plans to end Israel licensing deal, expand in North Africa

Orange this week revealed a number of moves that could see it end a brand licence agreement in Israel and expand further in North Africa, while some reports linked it to bids for smaller operators in Europe such as KPN, Belgacom or Telecom Italia.

The France-based operator confirmed rumours that it "ultimately wishes" to end its brand licence agreement with Israel-based operator Partner Communications, which uses the Orange brand to sell mobile services in the Israeli market.

"In line with its brand development strategy, Orange does not wish to maintain the presence of the brand in countries in which it is not, or is no longer, an operator," the company stated.

The comments provoked accusations of "bending to a pro-Palestinian boycott movement", noted Reuters, although the French company said that terminating the arrangement was a business decision, not a political one.

Orange was forced to respond to comments made by CEO Stephane Richard, who was widely reported as saying at a news conference in Cairo that he was willing to withdraw the Orange brand from Israel "tomorrow morning", but that moving too quickly would expose his company to legal risks and possible financial penalties, Reuters reported.

French Foreign Minister Laurent Fabius sought to calm the situation on Friday, saying France opposed any boycott of Israel but stressing that Orange was free to define its own policy, Reuters said.

Meanwhile Orange also outlined plans to expand further in North Africa, as it sees Africa and the Middle East as key to its future growth. The company is already placing its 20 units in MEA under one holding company, replacing the multiple holding companies that previously existed and thereby creating a simpler and clearer management structure.

According to Reuters, the company now intends to sell 10 to 15 per cent of its shares in its Egyptian unit Mobinil to bring in new investors and increase its stake in its Moroccan subsidiary Medi Telecom (Meditel) to 49 per cent from 40 per cent.

CEO Richard also said Tunisia was another market where it could expand.

"I'm thinking of Tunisia. I'm thinking of Morocco, for instance. So there is an organic growth which is still an engine for us," he told Reuters. "We will try to be very active including in terms of M&A to expand our footprint in Africa."

Over in Europe--where Orange has disposed of assets in Austria and Switzerland and is in the process of selling EE, its 50-50 UK venture with Deutsche Telekom--the company is reportedly now looking for potential acquisition targets.

According to the Financial Times, Gervais Pellissier, who heads the group's European operations, said Orange would be among the possible buyers of smaller operators. The list might include Belgacom, KPN and Telecom Italia, the FT added.

"In the next five years, there will be inter-country or intra-European consolidation," he told the UK broadsheet. "Players who are today playing on a single market or near to a single market might be purchased by those who are bigger."

For more:
- see this Reuters article
- see this separate Reuters article
- see this third Reuters article
- see this Financial Times article (sub. req.)
- see this Orange statement on Israel

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