Vodafone, meanwhile, is looking at buying its French affiliate SFR, as the vultures circle round Vivendi. Both acquisitions could be unpopular with shareholders in the current negative telecoms climate. Even so, they should prove beneficial in the long term: they would fill the biggest gaps in both carriers’ pan-European coverage.
Orange has implied it may buy out its German partner, MobilCom.
France Telecom’s mobile unit, Orange, on Tuesday released its subscriber figures. In its two largest markets – the UK and France – it added 284,000 and 454,000 new customers respectively.
The results were in line with expectations. More interestingly, Orange CEO Graham Howe said the group’s long-running dispute with German affiliate MobilCom would likely be settled within weeks, probably through a takeover. Debt from the acquisition would be shared between Orange, France Telecom and various banks.
Meanwhile, Vodafone is looking into buying French mobile operator SFR, in which it currently owns a 20% stake. The other 80% belongs to fixed-line telco Cegetel, which is itself 44%-owned by Vivendi Universal, 26%-owned by BT, 15%-owned by SBC and 15%-owned by Vodafone.
SBC and BT are interested in selling up, which could allow Vodafone to repeat the strategy it used on Japan Telecom and Mannesmann of buying the whole company, keeping its wireless unit and selling the rest. The price tag, though, would be around E10 billion.
Vivendi’s boss, Jean-Marie Messier, wouldn’t let this happen, but Vivendi shares are at a four-year low following a series of unpleasant surprises for investors. Shareholders are unhappy, leaving Mr Messier’s departure – or even a full breakup of the group – looking possible. This would give Vodafone a considerable opportunity.
Both acquisitions would be eminently sensible. Orange and Vodafone already have significant amounts of cash tied up in MobilCom and SFR respectively, and the businesses are geographically important – you can’t claim pan-European coverage without operations in Germany or France.
It’s not the optimal time for acquisitions, but both companies should be able to find the financing for these moves. While they might hit the short-term share prices, both deals would boost value in the long term.
Related research: Datamonitor, 2001: Global Mobile Devices