Orange says open to French telecom tie-up talks, not an instigator

AIX-EN-PROVENCE, France - 8 July 2018: French telecoms firms Orange (ORAN.PA) is open to discussing potential tie-ups with other operators in its home market but is not likely to be the instigator of consolidation in the sector, financial chief Ramon Fernandez said.

An aggressive price war between French telecoms companies has revived expectations in recent months that the sector, dominated by Orange, Bouygues Telecom, Altice Europe (ATCA.AS) and Iliad (ILD.PA) was ripe for consolidation.

Fernandez said in an interview with Reuters that Orange was in a strong position and could afford to see how other maneuvers in the sector played out.

“There is no urgency for us for this scenario of consolidation to materialize,” Fernandez said on the sidelines of an economic conference in Aix-en-Provence, southern France.

“Our position is to say that the door is always open to potential discussions,” he said, adding, however, that it was improbable that Orange would try to trigger those talks.

A previous bid by Orange to buy Bouygues Telecom and forge a dominant French telecoms operator collapsed in 2016.

It was complicated in part by a stand-off between the French government - which has a 23 percent stake in Orange - and billionaire Martin Bouygues over the clout the billionaire, and head of the Bouygues, would have gained in the merged group, according to sources at the time.

“The previous scenario under which Orange was in the driving seat is very, very unlikely (to repeat itself),” Fernandez said. “That said, there’s always room in a car for several passengers, so we’ll have to see if at some stage we should take one of those seats.”

Other French operators have signaled they could make a move. Altice Europe’s French unit SFR was approached last month by Bouygues, two sources close to the matter have told Reuters, confirming earlier reports by French newspaper Le Monde.

Orange’s Fernandez said that consolidation would have to happen at some point, across Europe as well as in France.

“In France there’s no room for four operators ... This is an industry that needs a lot of capital, you need to invest a lot to roll out next generation networks,” he said, adding that powerful competition from the United States and Asia was also a factor.