Orange sees more T-Mobile mergers as unlikely

Reuters News
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Posted: Jun 08, 2011 8:29 AM
Orange sees more T-Mobile mergers as unlikely

By Georgina Prodhan and Kate Holton

LONDON (Reuters) - France Telecom is unlikely to merge its mobile operations with those of Deutsche Telekom in other markets in the way it has done in Britain, the head of its European operations said on Wednesday.

But the French carrier, also known by its brand name Orange, is keen for more network-sharing deals to cut costs, following agreements with Deutsche Telekom's T-Mobile in Poland, Austria and Romania and with Vodafone in Spain.

"Network sharing, yes. The Everything Everywhere model is unlikely," Olaf Swantee told Reuters in an interview at the Open Mobile Summit in London, referring to the Orange-T-Mobile British joint venture formed in 2009.

"In all our markets we are open to looking at selective network-sharing agreements."

Speculation has repeatedly surfaced about a full merger between the French and German ex-telecoms monopolies, fueled by an increasing urgency to spread the costs of investing in networks as devices and mobile services become more demanding.

France Telecom is investing 18.5 billion euros ($27.1 billion) between now and 2013 as mobile data traffic doubles each year with smartphones like the Apple iPhone increasingly used for video and other bandwidth-hungry services.

To help compensate for the higher spending and help it maintain its generous dividend policy, France Telecom is setting up a joint purchasing agreement with Deutsche Telekom aimed at saving 3 billion euros ($4.4 billion) between now and 2015.

Swantee -- who heads all Orange Europe operations outside France -- said there could be scope for more savings outside core areas already announced if the first phase of cooperation went well.

Currently, the two companies are planning joint procurement in the standardized areas of network components, customer equipment, internal IT and service platforms.

The agreement does not currently cover investments in brand, marketing and local costs like maintenance.

"There is a possibility to widen the scope," Swantee said. "Definitely, over time." But he added it was difficult to predict until some progress had been made.

As well as looking at cooperation with Deutsche Telekom in markets where they overlap, Swantee also pointed to the success of other partnerships, such as the one with Vodafone in Spain.

Orange, the number three in Spain, has been taking market share from Telefonica and Vodafone, partly thanks to expensive improvements in its mobile network that it hopes will pay off as Spanish consumers eventually use more data.

It aims to become number two in Spain as part of a wide-ranging plan that runs to 2015 and includes an ongoing review of its European portfolio.

"We're on a roll," Swantee said, adding that data still accounted for a relatively small proportion of sales in Spain, where consumers have been hit hard by the economic downturn. "We think we can continue to drive up our market share."

(Editing by David Cowell)