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Orange to target smaller players in European consolidation

According to the Financial Times, Orange will target Telecom Italia in its plans to consolidate the European telecoms business.

According to the Financial Times, Orange will target Telecom Italia in its plans to consolidate the European telecoms business. In March this year, Orange’s CEO Stephane Richard told Journal de Dimanche that the telecoms giant and Telecom Italia had been discussing an alliance, which it viewed as “an attractive European consolidation opportunity.” However, this was followed just weeks later by a U-turn at the group’s 2020 strategy, during which Richard stated: “I confirm the non-existence of all discussions of any type – preliminary or otherwise – with the management and shareholders of Telecom Italia by Orange.”

The will-they-won’t-they saga continued yesterday, with the FT’s revelation that the Italian telecoms business is just one of several small European operators Orange is eyeing up. Gervais Pellissier, Orange’s deputy CEO, and executive director in charge of European operations predicted inter-country or intra-European consolidation within the market in the next five years, and that those playing in or near to a single market may be bought out by larger companies, the FT reported. Smaller companies could potentially includes the likes of Netherlands-based KPN and Belgacom in Belgium.

Orange is Europe’s second-largest service provider, based on subscriber numbers and has most recently faced competition from Free, a low-cost operator which launched in January 2012. The ongoing telecoms price war also includes providers Bouygues Telecom and SFR. Many see it as only a matter of time before a cross-border consolidation occurs, allowing companies to grow business rather than focussing on cost-cutting. In the meantime though, the French telecoms giants will be focussed on the auction next month of licenses in the 700MHz band which will allow improvements to their networks. All four of the major players are expected to take part, and license deals are expected to generate upwards of €2 billion.

Orange may be looking to expand in Europe, but Richard also told journalists this week that in another territory he is hoping to withdraw services. Speaking in Cairo, Richard reportedly said that the company wanted to cut ties with Israel, if it wasn’t so prohibitive financially. Human rights organisations in France have been lobbying for Orange to shut down its business in Israel and cease its role in facilitating Israel’s rule over Palestinian territories. Orange is one of the largest mobile phone providers in the country and is tied into an agreement with Israel’s Partner, which does not stipulate a termination date.