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Orange stresses need for European telco consolidation

Gervais Pellissier, a deputy CEO at Orange, is adamant there remains opportunity for large scale M&A in the European mobile market, describing the current environment as fragmented given the number of operator groups in the region.

Speaking at Orange’s annual European event in London, Pellissier believes it is not sustainable in the long run for around 80 operators, amounting to 40-45 telecoms groups, to remain in the market, particularly when comparing the region to the amount of players in the US and Asia.

gervais pellissier 6While not specifically addressing the company’s own ambitions around consolidation in Europe in particular, he suggested that the continent’s biggest operators – Vodafone, Deutsche Telekom and Orange itself – could indeed have a role to play.

However, he warned that any moves will require a better directive from the European Commission (EC), including a well-rounded framework, uniting rules for things like broadband and spectrum.

Orange’s European head was however less bullish on the potential for in-country consolidation, given tougher rules on mergers that potentially dampen competition, from national and European regulators.

Orange this year saw talks break down regarding a potential acquisition of Bouygues in the French market, and there was no indication from Pellissier that the company would go down that road again.

He drew on recent examples in Europe – such as the blocked merger between 3 UK and O2 in the UK, and the merger between 3 Italia and Wind, which required the entrance of a fourth operator to go through – as examples of how tough it is.

Convergence is key
Talking up Orange’s own aims in the continent, convergence was a key theme throughout Pellissier’s presentation, with the company pushing its bundled offerings across European markets.

Pellissier said the French operator now had 10 million convergence customers in total, described as those buying a package of fixed and mobile services, representing 11 per cent year on year growth, and making Orange “Europe’s leading convergence player in fibre and 4G”.

Breaking down the numbers, two-thirds represent a migration of customers, while one-third is through acquisition in mobile and fixed.

Orange indeed has invested heavily in beefing up its convergence play, most recently acquiring Spanish broadband player Jazztel last year for €3.4 billion.

And drawing back on consolidation, he believes a drive towards convergence is coming across the ecosystem, not just operators, signifying mobile’s increasing importance.

“For me, the best example is Liberty Global and their recent activity both in Belgium and the Netherlands, acquiring and merging with mobile players,” he said. “If you look at cablecos in general, until recently, mobile to them was only a commodity and not very interesting. Now that has changed.”

Source: Mobile World Live

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