Orange Switzerland stalked by potential private equity buyers

The auction for Orange Switzerland is expected to be dominated by bids from private equity firms, according to financial insiders, with Apax Partners, EQT Partners and Providence Equity thought to be showing keen interest.

France Telecom (FT) put its Swiss unit up for sale after failing to merge the company with rival Swiss operator Sunrise. The unit could attract a sale price of around €1.5 billion. FT has confirmed that it will return 50 per cent of the proceeds to its shareholders.

"This is a business in a secure market that generates free cash flow," a telecoms banking source told Reuters. "Any process is likely to involve sponsors rather than trade buyers."  Dow Jones Newswires also reported that Apax and providence are expected to be among the likely bidders.

However, the small size of the Swiss market (total telecom revenues of €13.9 billion per year) and the high level of competition make it a tough country for operators to generate meaningful profits. The former state-owned Swisscom dominates the market with a share of around 60 per cent, followed by Sunrise with 20 per cent and Orange with 17 per cent.

One cable operator, Liberty Global's Cablecom unit, which offers a cable TV, Internet and telephone services in Switzerland, has been named in other media reports as a possible bidder for Orange Switzerland. The company also offers prepaid wireless services over Orange's network via a MVNO agreement, and is said to be keen to fully enter the mobile market and offer better quad-play services to its subscribers.

For more:
- see this Dow Jones Newswires article
- see this Reuters article
- see this Telegeography article

Related Articles:
France Telecom eyes Spain, wants to unload Swiss, Austrian and Portuguese holdings
Swiss Sunrise sold to private equity for US$3.2bn
Orange/Sunrise merger blocked by Swiss regulator
FT Orange eyes MEA deals, invests US$630M in Orange Switzerland

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