November 15, 2018 / 6:16 PM / a month ago

Orange's CFO sees opportunity in H1 2019 for French market consolidation

BARCELONA (Reuters) - The French telecoms industry may have an opportunity in the first half of 2019 to cut the number of operators to three from four, once a process to reallocate radio frequency bands is completed at the end of the year, an Orange (ORAN.PA) executive said on Thursday.

The regulator has barred any merger talks until that process is completed, although there has been little sign that any of the four players - three owned by billionaires and the fourth a former monopoly - are open to being bought out.

Orange Chief Financial Officer Ramon Fernandez told Morgan Stanley’s TMT conference in Barcelona that “there will be a window of opportunity in the first half of 2019” for a merger.

“We are not going to drive a process because we are too strong to do it,” he said. “But we can be a facilitator because we think it could be good for us.”

The last attempt at consolidation was in May when Bouygues Telecom (BOUY.PA) made an approach to buy SFR, the French unit of Altice Europe (ATCA.AS), sources told Reuters at the time. But Bouygues’ broad offer was swiftly rejected.

Consolidation in the French market would also make sense in helping to reduce fragmentation more broadly across Europe, Fernandez said.

Orange’s boss Stephane Richard has previously said such consolidation was “inevitable”.

However, there is little sign any of the four players is open to an offer. SFR has not indicated it would change tack after rejecting the Bouygues approach.

Thomas Reynaud, chief executive of Iliad (ILD.PA), the telecoms group owned by tycoon Xavier Niel, said he would not initiate such talks.

Bouygues, the parent company of Bouygues Telecom, also ruled out selling its division. “Bouygues Telecom has never been on sale,” Chief Financial Officer Philippe Marien told analysts.

Reporting by Mathieu Rosemain in Barcelona; Additional repoting by Gilles Guillaume in Paris; Editing by Edmund Blair

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