France Telecom has confirmed it is to sell its entire Swiss operation to private equity firm Apax Partners for EUR1.6 billion. The deal ends months of speculation surrounding the identity of the acquirer; previous names in the frame included other private equity firms EQT and Providence, as well as a bid from Xavier Niel (the French telecoms entrepreneur, who had teamed with Goldman Sachs), and interest from Egyptian billionaire Naguib Sawiris.
Following news of the deal, Dow Jones Newswires reported that Apax Partners is now interested in partnering with rival Swiss mobile operator Sunrise. However, CVC, the private-equity owners of Sunrise, was excluded by France Telecom from bidding for Orange Switzerland, having not been provided with details of the transaction despite its interest in attempting to merge the two mobile operator businesses. Any such Orange Switzerland/Sunrise tieup will likely face close regulatory scrutiny.
A planned merger between Orange and Sunrise was blocked in 2010 on competition grounds. Sunrise was subsequently bought by CVC for US$3.3 billion from TDC, the Danish telecom company.
France Telecom announced on 28 July last year it was selling the unit as part of a portfolio review that will see it focus instead on fast-growing emerging markets in the Middle East and Africa. Orange Switzerland is the country’s third-largest mobile operator (16 percent market share) behind second-placed Sunrise (22 percent) and the dominant market-leader, Swisscom (62 percent).
Orange Switzerland was established in 1999 and posted revenue of CHF1.3 billion (EUR1.1 billion) in 2010 and had a customer base of 1.6 million at the end of Q3 2011. The company employs approximately 1,200 people. The deal will be submitted for approval next week.