Orange sets terms to end brand-licensing deal in Israel within 2 years

Orange agreed new terms to end a brand-licensing agreement with Israeli mobile operator Partner Communications within two years, although the France-based operator insisted that it remained committed to Israel.

Under a new agreement between the two companies, Partner has the right to terminate the brand-licensing agreement within 12 months, after which either Partner or Orange may terminate the agreement during the following 12 months.

"We have already spoken about our desire to directly manage our brand and in line with this, have ended licence agreements in several markets. This new agreement gives us or Partner the possibility to end the agreement in the next two years," an Orange spokesperson said in comments emailed to FierceWireless:Europe.

The move comes two weeks after Orange CEO Stephane Richard was forced to apologise after saying he would withdraw the Orange brand from Israel "tomorrow morning" were it not for the likely financial and legal penalties of such a move. In a meeting with Israeli Prime Minister Benjamin Netanyahu, Richard expressed deep regret over what he called a misinterpretation of his comments.

Orange said Partner would now conduct a market study over the next 12 months to assess its position in the Israeli market and what the impact of a re-brand would be.

Orange also agreed to pay €40 million ($44 million) to Partner from signing the agreement until completion of the market study, and an additional €50 million should the brand-licensing agreement be terminated within 24 months.

"It important to have the context here that we inherited a contract that wasn't acceptable to us and so we have negotiated a deal that is mutually acceptable to both of us and the amounts reflect the fact that the Orange brand has a financial value--and also that there would be a cost involved should Partner wish to re-brand," the Orange spokesperson said.

The use of the Orange brand in Israel dates back to the late 1990s, under a contract inherited by the group when France Telecom acquired Orange.

"We are pleased to have reached a new agreement with Orange further to our 17-year relationship with the brand and to have established a new framework for our future relationship with Orange," said Partner's chairman of the board of directors, Adam Chesnoff.

Should the branding agreement be terminated, Orange would rebrand its research and development operations in Israel under its own name, although Orange would be restricted from engaging in telecommunications services in the market.

"For Orange, Israel is a strategically important country and we have a long-term commitment to it, including our innovation activities through the Orange affiliates in Israel," said Orange's deputy CEO Pierre Louette.

For more:
- see this Orange statement

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