French and Italian leaders ‘back Orange/Telecom Italia tie-up’
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French and Italian leaders ‘back Orange/Telecom Italia tie-up’

Political leaders of France and Italy appear to have given the nod to a potential takeover of Telecom Italia by Orange after a meeting between the two in Venice.

French President Francois Hollande said after his meeting with Italian Prime Minister Matteo Renzi that there could be collaboration between the two countries’ industrial sectors, including in telecoms. The French state owns 23% of Orange.

A deal would have to involve Vivendi, the French media group, which has built up a stake of 23.8% in Telecom Italia – now rebranded as TIM – in recent months. Telecom Italia’s debt is put at €27 billion.

According to Reuters’ reports, Renzi said that any foreign investor with resources and ambition were welcome to enter the Italian market.

The comments appear to be carefully timed to coincide with a likely consolidation of the French telecoms market from four operators to three, a deal expected to be announced within weeks.

Orange is negotiating to buy rival French operator Bouygues Telecom for an estimated €10 billion from the Bouygues construction group, which would become the second largest shareholder in the former France Telecom.

That deal would involve some assets being moved to both Iliad, which owns disruptive operator Free, and SFR-Numericable, created two years ago when Vivendi sold mobile operator SFR to Altice, which owns Numericable.

A takeover of Bouygues Telecom by Orange would need only French regulatory approval, because Bouygues has no telecoms interests outside France. However, if Orange were to bid for Telecom Italia, the deal would need to go to the European Commission and possibly to other international market regulators, because both have wide international interests, including Orange Business Services and Telecom Italia Sparkle.

Earlier in the week French newspaper Les Echos quoted Orange CEO Stéphane Richard saying the Bouygues talks were “going well”.

And today Iliad CFO Thomas Reynaud said talks were continuing, though they were complex. Orange and Bouygues are aiming at agreeing a deal by the end of March. “The talks are going on,” said Reynaud, according to Reuters. “They are complex on operational and industrial aspects.”

Richard is believed to have said that Orange was prepared to investigate a tie-up with Telecom Italia if Vivendi invited it to do so.

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