Orange gives up on European consolidation for now

After some high-profile regulatory decisions blocking telco mergers, Orange has reportedly called off consolidation attempts for up to two years.

Tim Skinner

June 3, 2016

2 Min Read
Orange gives up on European consolidation for now

After some high-profile regulatory decisions blocking telco mergers, Orange has reportedly called off consolidation attempts for up to two years.

The FT reported Deputy CEO of Orange, Gervais Pellissier, as saying decision makers in Brussels have set a precedent which will deter European operators from attempting consolidation through M&A. In response to recent rulings, Pellissier infers there is little point in proposing further deals which will likely face intense and sceptical regulatory scrutiny.

“It is clearly not on the agenda and when I say not on the agenda it is… for the next 12, 18 or 24 months,” he said.

In recent months, Europe has knocked back the £10.3 billion Hutchison acquisition of O2 UK, citing a worry over competitive and pricing behaviour of telcos operating in a market reduced from four providers to three. As Europe relentlessly chase its utopian vision of a digital single market, Pellissier said it is becoming increasingly unlikely that domestic competition authorities will directly contradict the Brussels-based regulatory behemoth.

“There is no direct legal link but we cannot imagine a local antitrust authority going completely in the other direction… of the tone given at the Brussels level,” he said.

Brussels is also looking closely at Hutchison’s attempted acquisition of VimpelCom’s Italian business Wind. On the face of things the case looks like a carbon copy of the Three/O2 case in the UK, with the regulator again worrying a reduction in the number of operators in Italy will force up prices, stifle innovation and see the industry’s telcos lose incentive to continue much-needed investment in infrastructure.

Over in Orange’s home market of France, the operator called off M&A talks with Bouygues Telecom recently, after board-level talks proved rather unproductive. Pellissier told the FT it was more about trust than it was about the terms of the deal.

“We saw how they are unable to work with each other . . . the main reason why the deal failed is the lack of trust between the players,” he said.

While the deal did have its complications, with the divestment of assets to rivals SFR and Free being a particular sticking point, the collapse of the deal further illustrates how a three operator model in European markets is being increasingly viewed as impossible for the time being.

Despite protestations from the broader telco community that consolidation will drive investment in infrastructure and improve network coverage, Pellissier’s candid comments suggest one of Europe’s biggest operators has resided itself to letting Brussels have its way.

About the Author(s)

Tim Skinner

Tim is the features editor at, focusing on the latest activity within the telecoms and technology industries – delivering dry and irreverent yet informative news and analysis features.

Tim is also host of weekly podcast A Week In Wireless, where the editorial team from and their industry mates get together every now and then and have a giggle about what’s going on in the industry.

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