France Télécom M&A implications

I have not been active the last two weeks due to holiday reasons, will pick up regular bloggin again during August.

A definitely noteworthy deal however is the purchase of a controlling stake in Amena, the Spanish mobile phone group, for €10.6bn ($12.7bn) by France Télécom. James will report more on the deal and I agree with him when he says that this deal is a confirmation of broadband/VoIP/mobile convergence being a major M&A driver.

There are however more implications behind this deal, in particular the long-term life expectancy of freemove, an Alliance of T-Mobile (Germany), TIM (Italy), and yes, Movistar (Spain) and Orange (France and UK). The whole point of freemove is to offer a virtual European mobile network in competition with Vodafone's pan-European network for winning large multinational corporate customers and keeping the traffic of frequent roamers on the freemove networks. So by acquiring Amena, France Télécom (which owns Orange) basically slapped their partner Movistar right into their face. Movistar and their owner Telefonica are probably less inclined just to stand there and watch, so I throw the first stone by saying that very soon we might see the acquistion of O2 by Telefonica. O2 competes with Orange in the UK, and also with T-Mobile in Germany (which would result in incremental confusion...)

Chances are that Vodafone will have a big laugh at this deal, as it confirms Voda's long-time strategy of having a large and seamless footprint, but also as their virtual competitor freemove gets less stable due to the seductive potential of M&As (did anybody say GlobalOne?). Already now the Vodafone OpCos have higher ARPUs than their respective national competitors at roughly equal market shares, which means that Vodafone is better at getting and keeping the high-value customers.

Comments

[Florian Seroussi]

Since France Telecom bought Orange few years back, they are very active in the wireless/wifi/voip business. A good way to find out about their strategy is to check their venture capital webiste http://www.innovacom.com. A lot of investments in voip/toip companies.

[Lars]

Florian, thank you for that information, admittingly I was not aware of FT's VC arm. I only knew about T-Venture, Deutsche Telekom's subsidiary for corporate venture capital.