Commission set to clear Orange deal

Date: 27/07/00

By Renee Cordes

EU REGULATORS are expected to approve France Telecom's plans to buy UK-based mobile phone group Orange, provided that the firms agree to eliminate overlaps in the Belgian market.

The European Commission has a 23 August deadline to rule on the €40.3-billion deal, which would give the French giant a leading position in the UK, Europe's largest telecoms market, and expand its wireless reach world-wide.

Industry insiders say competition officials are likely to demand that France Telecom sells Orange's 50% share of a joint venture with Dutch company KPN Telecom's in Belgium, called KPN Orange Belgium. This reflects concern that France Telecom would otherwise wield too much power on the Belgian market as it already owns a stake in Mobistar, the country's second-largest mobile phone operator.

"This is the principal area the companies will need to address," said Kevin Fogarty, an analyst at Daiwa SBCM Europe in London. But he added that this should fit in well with France Telecom's plans to expand in Europe, given that Mobistar has a far more substantial footing in the Belgian market than KPN Orange.

France Telecom announced in May that it had agreed to buy Orange from Vodafone, and planned to list shares on the London, Paris and New York stock exchanges by the end of this year or in early 2001. The new company, to be called New Orange, is expected to have around 30 million controlled

subscribers by the end of 2000 and will have a strong market position in each of the four largest European markets.

"The acquisition of Orange and the creation of New Orange is a major step in France Telecom's international strategy to become a European leader and global player," said Michael Bon, the French firm's chairman and chief executive officer when he announced the deal.

EU regulators are expected to approve France-Télécom's plans to buy UK-based mobile phone group Orange, provided that the firms agree to eliminate overlaps in the Belgian market.