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Telecommunications industry

France Telecom Acquires Orange PLC for $37.4 Billion

Strategic Insights

— 1 min read

France Telecom has agreed to purchase Orange PLC, the U.K.'s third-largest wireless phone operator, from Vodafone AirTouch for over $37 billion, making it one of the most significant deals in Europe. The acquisition represents a major expansion for France Telecom into the British wireless market, giving it a substantial reach beyond its borders. Orange has six million customers in Britain and licensing arrangements across Europe.

Key Takeaways:

  • France Telecom will pay approximately $37.4 billion in cash and stock to acquire Orange PLC, including assuming $9.4 billion in debt.
  • The acquisition will vault France Telecom into the upper echelon of European telecommunications competitors, creating a universal mobile telecommunications system license to offer fast Internet access on cellular phones.
  • Orange has six million customers in Britain and licensing arrangements across Europe, with a 'third generation' wireless license.
  • France Telecom plans to merge Orange with its own wireless unit, Itineris, which has more than 10 million subscribers across various countries, and then spin off the combined company within a year.
  • Hans Snook, Orange's chief executive, will run the new company following the merger and spin-off.
  • The acquisition is a reversal of Vodafone's original plan to spin off Orange and sell shares to the public, which was altered due to the recent spate of high-revenue auctions across Europe for the third-generation wireless licenses.
  • Vodafone will retain a 10 percent stake of nonvoting shares in France Telecom.

Statistics:

  • $37.4 billion: The total price paid by France Telecom to acquire Orange PLC.
  • 6 million: The number of customers Orange has in Britain.
  • 40 billion euros: The cash and stock France Telecom will pay to acquire Orange.
  • $9.4 billion: The amount of debt France Telecom will assume to acquire Orange.
  • 10 percent stake: The share of nonvoting shares Vodafone will hold in France Telecom.
  • 15 percent: The stake in Cegetel Vodafone sold to Vivendi two weeks ago.
  • $1.9 billion: The amount of cash raised by France Telecom to support the acquisition, through the sale of its stake in Telefonos de Mexico.

Sources:

  • Executives close to the negotiations cited in the article.
  • The Wall Street Journal, unspecified publication date.
  • "France Telecom to Buy Orange", The Wall Street Journal, unspecified author (presumably a WSJ reporter or freelancer), not specified.
  • "Orange sold to France Telecom", The Wall Street Journal, unspecified author (presumably a WSJ reporter or freelancer), not specified.

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