France Telecom and TDC have announced today that they are to merge their respective Swiss subsidiaries, Orange and Sunrise Communications.
France Telecom will pay at closing a net amount of €1.5 billion to TDC and will become a 75 per cent shareholder in the combined entity. TDC will hold the remaining 25 per cent.
The combined entity will have around 3.4 million mobile and 1.1 million fixed and broadband customers. It will account for around 38 per cent of Switzerland’s mobile market and 13 per cent of the country’s fixed broadband connections.
For 2008, the combined entity would have generated total pro-forma revenues of €2 billion and EBITDA of €534 million. Costs of around €2.1 billion are expected to be saved. It will broaden the scope of services offered through more than 100 shops throughout Switzerland, bringing the best of both companies’ offers to a larger number of customers.
The companies claim the merger will bring substantial benefits to Swiss customers, through better 2G and 3G network coverage.
They are also claiming benefits to the environment, as joint network development would lead to a reduction of around one third in the projected number of mobile masts compared to the original standalone network build-up plans. The combined entity would also provide a larger retail estate and improved customer services.
France Telecom deputy chief executive Gervais Pellissier said: “The planned merger of Sunrise and Orange Switzerland marks a new significant step in the long-term investment by France Telecom-Orange in Switzerland. Following the UK joint venture between Orange and T-Mobile, France Telecom completes another major in-market consolidation, consistent with its M&A policy.”
TDC chief financial officer Jesper Ovesen added: “We are pleased with the transaction and believe that the combination will create a stronger player in the Swiss telecommunications market. We look forward to working with France Telecom and creating further value for all stakeholders. The agreement is a natural last step towards TDC focusing on the Nordic markets, which is our strategic goal.”
Thomas Sieber, chief executive of Orange Switzerland, added: “This merger is a further proof of France Telecom’s lasting commitment to our country, and will offer us fabulous opportunities by creating the leading alternative operator in the Swiss telecom market.”
Sunrise chief executive Christoph Brand said: “The merger with Orange is an important milestone for us. This is a logical way for us to improve our competitive position in the Swiss market and create a better product offering for our customers. The combined group will be better placed to make the necessary investments for the future and allow us to play a more active role in shaping the market.”
The board of the combined entity will be composed of representatives of TDC and France Telecom, with France Telecom holding the majority of the seats. Thomas Sieber will be the chief executive officer.
Christoph Brand will continue as Sunrise chief executive up until the completion of the transaction. Post-closing Christoph Brand will help supervise the initial integration, before moving on to pursue new executive opportunities outside of the combined entity.