Orange will not participate in any future consolidation of the French multi-play telco business, according to CEO Stéphane Richard, despite ongoing speculation about the future of Altice France/SFR.
Speaking to analysts after the company posted strong full-year results, Richard said that Orange would not play a role in any future combination except “to facilitate it” and would not revive anything akin to its previous abortive move to acquire Bouygues Telecom.
“There is no hidden agenda and no hidden project anywhere,” he said. “There is no project that makes sense for us today.”
Richard was responding to a question that referenced rival service provider Altice, under pressure since last year due to concerns about its indebtedness following poor Q3 results. Altice announced a major reorganisation of its operations including a spin-off of its US assets in January.
Altice earlier this month condemned a report by the right-wing weekly Valeurs Actuelles that it was considering a sale of all or part of SFR, leading the publication to publish a retraction.
Richard said he did “not know” if there would be a development relating to Altice in the coming months, but that “Orange will not play a front role in any type of consolidation scheme”.
He said that Orange’s talks with Bouygues a couple of years ago had been engaged because the deal “was outstandingly value creative”. He said that there was no kind of operation today “in which we could play a leading role”. Orange and Bouygues had diverged and there was no chance of that deal being revived, he said.
“We cannot buy SFR and we cannot buy Free, which is in any case not for sale,” he said. Any consolidation would involve two of the other players. He said consolidation still made sense because France was one of the only markets in Europe with four players, which was probably “not a sustainable situation in the long run”.
Richard said Orange could “help facilitate” consolidation but would not participate in it. The inference from this is that Orange could acquire certain assets that may be disposed by merging parties to secure regulatory approval for a deal.
Referring to negotiations with Altice to carry the latter’s pay TV channels, Richard said that Orange had decided it would be a positive move to take Altice’s pay TV services in order to allow customers “to benefit from all possible content that matters to them, and sport including the Champions League is clearly an attractive content for our customers”.
He said if Orange could strike acceptable terms with Altice it would take its services. In non-sport genres, he said, Orange had attractive content through its own OCS offering and its deal with Canal+ and “did not need anything else”. However, in sports, Altice’s grip on Champions League rights meant that a deal was desirable.
“I don’t know if we will get a deal or not – it’s an ongoing discussion,” he said.
Richard said that Orange’s deal with Canal+, whereby it makes the latter’s packages available as part of its own multi-play bundles, was for three years, during which Canal+ will hold the rights to top-tier French football, meaning that the pay TV operator’s offering is particularly attractive.
Richard said that Orange would “assess the relevance of the deal” after the three year period to see it was “accretive”.
Richard said Orange was in “tough” discussions with TF1. He said the TF1 team “had decided to change the rules” and that Orange thinks “it has no reason to pay” for content it did not pay for in the past.
“No-one has any interest in escalating this,” he said. The withdrawal of channels from Orange’s box is “more disturbing for TF1” than for Orange, he said, because it could cut the former’s advertising dependent audience by 25%. Together with Canal+ and Free, which are also in dispute with TF1, Orange accounts for half of the broadcaster’s audience. “We are not in a weak position,” he said.
Richard said there would be “substantial renewal” of the Orange management team after his leadership mandate is renewed. He said he wanted “more non-French” people, “more women” and “more operational people”. The new team will be unveiled at the end of March.
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23 October 2020 @ 09:29:38 UTC