Cross-border M&A activity in Europe is five years away with operators still opting to snap up targets within their borders, Orange’s Deputy CEO has said.
At a roundtable in Paris on Tuesday, Gervais Pellissier, the operator's executive responsible for its activities outside of France, made the remarks in a wide-ranging discussion with journalists.
The executive has been leading Orange’s €3.4 billion acquisition of Jazztel, which got the final regulatory green light last week.
He said inter-country M&A remained the focus currently, and ruled out Orange entering into any countries in Europe in which it is not active presently in the short term.
However, he said “small pieces” of business could be done in Africa, a region where growth is on the up.
Orange revealed in April that it has over 100 million customers in Africa and the Middle East, where revenues grew seven percent in the first quarter.
But Pellissier did hint at potential European targets in the longer term.
He did not reject the possibility that Telecom Italia or Belgacom, should the Belgian government lower its stake, could interest Orange.
“There is no big political issue between France and Italy or Belgium from a security point of view [that could block a deal],” he noted.
Pellissier also said that the European Commissioner for the Digital Economy and Society, Gunther Oettinger, “wants bigger telecoms groups”.
Such views chimed with thoughts from France-based think tank iDate, which launched its 2015 Digiworld Yearbook on the same day.
“Circumstances are improving, and the decline in revenue and margins is slowing or has leveled off,” it said.
“There is no shortage of cash on hand to finance deals, and the banks are no longer put off by debt levels that are four times EBITDA – as proven by the recent Altice takeover of Portugal Telecom.
“There are already enough multinationals amongst top European telcos for a domino effect to occur: mergers that began with national intentions will lead to other deals, which will lead to the emergence of pan-European operators.”
Pellissier said he welcomed the emergence of players like Altice and Liberty Global.
“Any move to consolidate is a good move,” he commented.
But referring to Altice specifically, he added: “They are starting to realise a telco incumbent is harder to manage than a cableco.”
Regarding Liberty, Pellissier said it would “make sense” for Vodafone to do a deal with the US-based company in the UK.