Orange outlines timeline for SFR takeover and plays down potential hurdles

• Orange CEO Christel Heydemann says SFR deal is on track for a late 2027 closure
• The deal will see SFR split between France’s three MNOs
• But the agreement still faces hurdles, including Altice staff strikes, an antitrust probe and rising interest costs

Orange CEO Christel Heydemann has played down the potential impact that staff unrest, higher interest fees or an ongoing antitrust probe could have on the French telco’s efforts to carve up SFR between itself and rivals Bouygues and Iliad (operating as Free).

Speaking during the French incumbent’s latest financial earnings call, Heydemann acknowledged there are still some potential hurdles to the €20bn deal, which was announced in June. However, she said Orange and its local frenemies still expect the signing of the deal to be completed by the end of 2026 and the acquisition to be closed by the end of 2027.

“The timeline is unchanged,” she said during a question and answer session. Orange’s statement comes at a time when SFR’s employee representatives are battling it out in a Paris court, with a hearing on the merits of it scheduled for early December. Meanwhile, thousands of the company’s employees have taken industrial action amid uncertainty over job security.

Heydemann also played down concerns that rising interest rates could lead to a renegotiation of the deal, pointing out that her first concern was to get an agreement finalised and signed, and deal with the antitrust process that was triggered by the memorandum of understanding. This, according to regulator Arcep, is unlikely to conclude until late in 2027.

“We have a solid balance sheet and most of our existing debt is on a fixed rate,” the CEO told analysts. “When it comes to price renegotiation in the transaction, we have a mechanism to adjust the price depending on the performance of SFR, but I can’t disclose any details about this. We have foreseen the evolution of SFR and it is currently trending as expected, so we don’t see any change from that standpoint.

Strong quarter driven by Middle East and Africa growth

The Orange chief was speaking following the release of the company’s third-quarter results, which reported revenue growth of 3.6% to €12.2bn, while earnings before interest, taxes, depreciation and amortisation but after leases (EBITDAaL), were up by 4.1% to €4.1bn. This was driven by particularly strong growth of 14.2% in Africa and the Middle East.

Orange also reduced economic capital expenditure (eCapex) in the quarter by 2.5% to €1.7bn, representing 14.8% of revenue.

But it wasn’t all good news: Orange Business continued to see a decline in its revenue, down 2.5% year on year, which Orange said was due to “the macroeconomic environment”. Orange Cyberdefense, however, reached €1bn in revenue for the first three quarters of the year, an increase of 12.2%.

“This third quarter confirms the strong momentum generated by our ‘Trust the Future’ plan. Revenue increased across all our geographies, driven by a robust commercial performance,” said Heydemann. “Africa and the Middle East continued its remarkable growth, while Europe, particularly Poland, delivered solid results.

“We are continuing to implement our plan, with several developments in the third quarter: The launch of new offers in France, the integration of MasOrange – now renamed Orange España – sustained growth of Orange Cyberdefense, and an extended SecNumCloud qualification for Orange Business’s cloud offerings,” she added.

- James Pearce, Editor, TelecomTV