In an interview with Les Echos website, Sébastien Soriano, Chairman of ARCEP – the telecoms watchdog – has given its opinion on the hypothetical acquisition of Bouygues Telecom Orange. The authority does not object to such redemption, but “draws red lines” that must be adhered to reap a positive opinion from ARCEP.
Earlier this year, Orange and Bouygues Telecom confirmed holding discussions for a buyback of the second by the first. A few days later, Stéphane Richard, CEO of Orange, had returned a little more detail on the discussions, adding that if the acquisition took place, it would be beneficial for everyone: Bouygues, Orange but also the consumer. ARCEP – the Regulatory Authority for Electronic Communications and Postal – also has a role to prevent the operators of practices undermine the investment effort and thus to consumers. In an interview with Les Echos, Sébastien Soriano gave some details of what will be considered by the authority if redemption discussions progress further.
Orange’s position should not be increased
ARCEP will not really have the last word in case of redemption. The authority will simply give his expert opinion to the Competition Authority. It is the latter that will validate the potential acquisition of Bouygues Telecom Orange. In its opinion, ARCEP will ensure grain “it is not necessary that this transaction, if done, results in a strengthening Orange’s position, particularly in markets where it is leading.” The man added that “the incumbent is already very strong and maintains a capacity to deploy faster networks than anyone. He demonstrated in the mobile with the 4G and fixed with the fiber. Be careful not to go back into the opening to competition in the sector. The gains for consumers remain fragile. ” Finally, ARCEP will be “particularly attentive to markets where competition is still limited, especially from corporate customers and in rural areas.”
A veto right on the frequencies
Alongside this advice, ARCEP also has a veto in a particular area: the transfer of frequencies. If the acquisition of Bouygues Telecom appropriate, 2G / 3G / 4G frequencies can be sold to competitors or retained by Orange. ARCEP will however have a say and be able to oppose a transfer or retention of frequencies if “this upsets the competitive balance.” ARCEP can also “decide to return or to the State if one considers that the telecom sector has enough frequencies and their use may be more effective elsewhere.” However, imagine that some of the frequencies will be sold to SFR and Free Mobile who are struggling to invest in 4G.
He will have to wait until more because the discussions are not yet complete. At last, an agreement could be reached within weeks. Both operators are not attached to the ultimatum and therefore discuss at their own pace. We already know that the government is not against a return to the three operators. It therefore lacks more than the opinion of the Competition Authority.