Sign in Subscribe
Telecommunications industry

France Telecom's Acquisition of Orange PLC: A Game-Changing Move in European Telecommunications

Strategic Insights

— 1 min read

The acquisition of Orange PLC by France Telecom represents a significant shift in the European wireless telephone market, catapulting France Telecom into a new league of competition with giant companies like Vodafone. The deal, which sees France Telecom combining its wireless units with Orange's operations, will create a wireless operator in Europe with 30 million customers by year's end, second only to Vodafone's 35 million.

Key Takeaways:

  • The acquisition of Orange PLC by France Telecom for $37.5 billion marks a major step in the French company's strategy to become a European leader and global player.
  • The combined wireless company, New Orange, will be run from London by Hans Snook, the current CEO of Orange PLC, and will have relative autonomy over its management.
  • The deal represents a significant coup for France Telecom, which has faced a string of problems recently, including a losing bid for E-Plus Mobilfunk and a failed attempt to win a third-generation mobile license in Spain.
  • Orange PLC has experienced high growth rates in Britain, making it a highly coveted company in the European telecommunications market.
  • The deal values the combined wireless company at 150 billion euros, or about $141 billion, and will see shares of 10-15% of New Orange sold to the public within a year.
  • France Telecom will pay Vodafone about 55% of the acquisition price in cash and the rest in France Telecom shares, and will assume about $2.7 billion in debt and the $6.2 billion cost of Orange's third-generation mobile license in Britain.

Statistics:

  • The combined wireless company, New Orange, is projected to have 30 million customers by year's end, second only to Vodafone's 35 million.
  • The acquisition price of Orange PLC is $37.5 billion, with 55% in cash and the rest in France Telecom shares.
  • The deal values the combined wireless company at 150 billion euros, or about $141 billion.
  • France Telecom will pay about $2.7 billion in debt and the $6.2 billion cost of Orange's third-generation mobile license in Britain.
  • Orange PLC had more than 10 million subscribers and operations in Denmark, Belgium, the Netherlands, Italy, Austria, and Switzerland.

Sources:

  • The Wall Street Journal
  • Reuters
  • Bloomberg

Read more