Orange « is calling » Bouygues Telecom….and starts its makeover by adding banking & insurance services
Orange, formerly France Telecom and Europe’s largest mobile, carrier and service provider in Europe, announced its plans to acquire its competitor and rival, Bouygues Telecom.
The Telecommunications market, especially mobiles, is highly fragmented in Europe and ready for consolidation. This should lead to a reduction in competitive pricing but allow for increased investments in new high speed mobile « 5G » and cable networks based on optical fiber infrastructures for the next decade 2020.
Bouygues Telecom was targeted last year by SFR and rejected the €10 billion take-over proposal.
The State regulator has yet to approve this deal in particular as Orange is partly owned by the French government. Obstacles also may lie with the European-level competition agency which warned that this deal could increase prices and reduce choice telecoms subscribers.
In a parallel development, Orange has officially jumped into the market of bank and insurance services (where the return on investment is faster and requires less investment than telecoms infrastructure). It acquired a considerable part of Groupama, the French bank and insurance company, to become Orange Bank.
The goal is to embrace the high growth market of mobile banking, which has been especially successful in Africa. By joining its technology leadership in communication, security and internet with the financial expertise of Groupama, Orange endeavors to create new business value and opportunities.
As a large company with mature activities, Orange needs to survive by generating new ventures and creating new business opportunities in an economic context where growth rates remain particularly low and flat.