French auction "necessary before consolidation" – Orange Europe chief

French auction “necessary before consolidation” – Orange Europe chief

01 OCT 2015

Orange believes France’s upcoming 700MHz auction is a necessary step before consolidation can happen in the market, and its outcome could “change the balance of power” between the country’s four operators.

Speaking at a press conference in London earlier today, Gervais Pellissier (pictured), executive director of the company’s European operations, said the auction could prove integral in consolidating the market, which still operates with four established players, unlike other large European countries.

The outcome of the auction, due to be held in November this year, could “reopen the game for whom could buy whom”, he said.

Pellissier looked back at the country’s experiences in auctioning 800MHz, where SFR was a big bidder.

“In the case of 700MHz, we might see a situation where people will again pay a lot for more than they should, and when I look at our competition, perhaps spending €1 billion on spectrum is a big strain on some balance sheets,” he told Mobile World Live.

Pellissier said Orange, which along with its three rivals confirmed its participation in the process earlier this week, needs 700MHz – even though it bought 800MHz in the last auction – “because of our size, reach and scale”, while hinting that Bouygues and Iliad (Free) will need to bid aggressively in the auction.

“There’s less pressure on some players, and more pressure on others, particularly if you consider the balance sheet of those that have created huge debt.”

Convergence ambitions
Orange, which has a presence in eight European countries, talked up the importance of the continent within its wider operations, despite conceding the market “may not look as attractive as it used to”.

Pellissier said its strategy is now very much focused around convergence, with the company outlining its ambitions to become the number one convergence player in the market.

In terms of subscribers, Orange said 45 per cent of its fixed-line customer base are bundled subscribers, with the total at 80 per cent in Spain, following its acquisition of Jazztel.

Pellissier said Orange has seen convergence as inevitable for almost a decade, classifying the play as offering customers a single contract for its mobile and fixed operations.

The company said it is now pretty much tied with Vodafone at number two in the space, and is intent on closing the gap on Deutsche Telekom.

To achieve the feat, Orange said it is targeting numerous ways to beef up its offering including acquisition, substituting services and partnerships.

The company is however challenged by “fragmented EU regulation”, which becomes worse when trying to expand into the content space.

EU single market distant
This is also true for cross border consolidation, said Pellissier, largely because the EU is still not in a good position to establish a strong base for a single digital market.

“When we look at the single digital market, we look for consistency and this is not happening in Europe,” he said. “Spectrum auctions is a case in point. When 700MHz is for sale, it should be available in more or less all European countries at the same time.

“I’m not suggesting one auction for the whole market, but you need a single authority to decide upon allocations of these different auctions.”

The need to establish this comes hand in hand with cross border consolidation, because there is now enough synergies across the European market.

“Everyone is pretty much using the same tools, and we are all starting to see the same consumption patterns,” he said.

“For us, cross border consolidation is interesting because of Europe’s fragmented nature, but we don’t believe it is on the table today.”

Author

Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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