Orange not planning major M&A, says new CEO

• Orange has reported its first quarter financials
• Numbers show steady progress in key areas
• Earnings report is first for new CEO Christel Heydemann
• She says her plans don’t include major M&A deals

Christel Heydemann, the new CEO at Orange, has made it clear that major M&A activity is not part of her strategy for the major network operator and that there is plenty of progress to be made with the company’s existing operations in Europe, the Middle East and Africa.

During a first quarter financial report press conference held on Tuesday morning, Heydemann, who took over from Stéphane Richard earlier this month, noted that “Orange’s strategy doesn’t involve cross-border, European consolidation or a big M&A project... We have a lot of value in the business that we can already bring to our existing customers in our existing geographies,” she added.

The comments came only a day after one of Orange’s main peers, Vodafone, was reportedly coming under pressure from investors to get M&A deals done. 

Her comments don’t rule out M&A moves that strengthen existing operations: The operator is in the process of merging its Spanish business (which has been struggling in recent years) with that of MásMóvil to create what Heydemann described in prepared earnings report comments as “a sustainable player with the investment capacity, infrastructure and competitive edge necessary for its future development and for the benefit of both consumers and businesses in Spain.” (See Orange and MásMóvil on course to merge Spanish operations.)

It's notable that Orange beat out Vodafone to secure the merger deal with MásMóvil. 

And in the past year it has closed acquisitions in Romania and Belgium to help further its convergence strategy, which the operator has been discussing quite a lot in the past year or so. (See Faster fibre rollouts are key to convergence strategy success, says Orange’s deputy CEO.)

That focus on driving greater convergence (getting customers to take high-speed mobile and fixed broadband services under a single contract from Orange) was highlighted again in the first quarter numbers, with the operator stating it had 11.6 million convergence customers in Europe at the end of March, though that is only up by about 100,000 during the quarter.  

Otherwise, Orange’s numbers were steady, with a slight rise in year-on-year revenues to €10.6 billion, helped by an 8.7% increase in sales from the operator’s Africa and Middle East operations and a 12.2% increase in revenues at Totem, its wholesale towers operation. 

Orange ended the first quarter with 231.8 million mobile customers, up 5.3% from a year earlier, and 12.8 million fibre broadband customers, up by almost 20%. For further details, see this earnings press release. 

- Ray Le Maistre, Editorial Director, TelecomTV