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NTL could be real winner of Orange sale

By Sonya Rabbitte

Published: Wednesday 31 May 2000

Analysts have welcomed the acquisition of Orange by France Telecom, which will allow Orange to forge ahead with advances in WAP and voice-data integration technology and predicted cable company NTL could be the surprise winner from the deal.

Andrew Layton, senior manager with Cluster Consulting, said Orange would benefit from France Telecom's Internet experience and track record in foreign alliances. "Orange has never had the clout to negotiate with people like Ericsson. France Telecom will give them that international credibility," he told silicon.com.

There is also speculation that UK telecommunications group NTL will benefit from the acquisition. France Telecom owns a 25 per cent stake in NTL, and following its withdrawal from the 3G licence auction earlier this year, analysts suggest NTL could look at a virtual operator agreement with Orange as a viable option.

"NTL and Orange have a similar brand response. They are both perceived to be consumer friendly and modern and are positioned to be good partners," said Layton.

"But there is the risk that NTL would be seen as the smaller of the partners and be eaten up. I think they would be seeking a virtual operator capacity," he added.

France Telecom completed the £25.1bn acquisition of Orange on Tuesday morning in a deal that will also see the operator taking over £1.8bn of the UK mobile providers' debt.

The French telco will merge Orange with its existing mobile networks, such as Itineris.

New Orange will be the second largest mobile company in Europe, in terms of network coverage, with a strong presence in the four major European markets. It plans to float on the New York, London and Paris stock exchanges later in the year.

With French mobile usage below UK figures, Robin Bosworth, director of Schema consulting, said the acquisition also strengthens France Telecom position as a mobile provider on the international market.

"It allows France Telecom to broaden their portfolio and look at market segments like SMEs that they haven't targeted before in the UK, " Bosworth told silicon.com.