Orange denies Telecom Italia talks but reviews European strategy

Orange denies Telecom Italia talks but reviews European market

01 DEC 2015

Orange is not in talks with Telecom Italia (TI) but hired investment banks to advise on a European strategy, according to media reports.

Among the options are a potential tie-up with Telecom Italia, according to a Bloomberg report. However, the company later said no talks had actually taken place with the Italian incumbent. Likewise, TI’s CEO Marco Patuano denied discussions had occurred earlier this week.

“Orange’s financial and strategic management team is working with banks to finetune its view of the evolution of the telecoms sector in the context of a single market on a 5- to 10-year horizon,” an Orange spokesman told Reuters.

Where Orange might invest is less clear, however. In recent years, the group has looked more like a seller than a buyer. Back in 2011, it sold its operation in Switzerland to private equity firm Apax Partners. At the end of 2014 it agreed to offload its stake in UK operator EE to BT. The deal is due to close in 2016. The sale would equip Orange with the funds for expansion.

The group appears to be looking at consolidation in the markets where it already has a presence. It successfully acquired Spain’s Jazztel last summer to fill out its quadplay strategy in that country, and was linked to a bid in its home market for Bouygues Telecom in 2014.

However, any bid for Telecom Italia would face multiple hurdles, including recent investors Vivendi and Xavier Niel whose own objectives are far from clear. In addition, any bid would need the acceptance of the Italian government which views telecoms as a strategic sector.

The Italian government has a so-called golden power law to veto a merger or takeover where a foreign player is buying a company in a strategic sector of the economy, including telecoms.

Author

Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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