Swiss networks to merge; France Telecom become majority owner

The agreement to merge the Swiss-based operators Orange and Sunrise has given fresh momentum to the consolidation of Europe's telecoms sector. The companies, respectively owned by France Telecom (FT) and Denmark's TDC, will see FT paying €1.5 billion to TDC to gain a 75 per cent ownership of the new company.

Analysts believe that the merged firm - with around 3.4 million customers and a market share approach 40 per cent, should be able to offer stronger competition to Swisscom, the state-controlled market leader. Also, significant Capex and Opex savings look possible by reducing the number of planned antenna sites by around a third. Estimates provided by FT indicate that Opex savings could reach an annual run-rate of €132 million, with Capex savings of €376 million expected between 2010 and 2015.

Gervais Pellissier, FT's deputy chief executive, said, "Following the UK joint venture between Orange and T-Mobile, FT completes another major in-market consolidation, consistent with our M&A policy". Jesper Ovesen, CFO of TDC, said the deal "is a natural last step towards TDC focusing on the Nordic markets, which is our strategic goal".

Neither executive made reference to job redundancies, but there is significant overlap between Orange's and Sunrise's operations in Switzerland.

For more on this story:
Financial Times

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