By Simon Zekaria
BARCELONA-- Orange SA Thursday said EE, its U.K. mobile joint
venture with Deutsche Telekom AG, isn't sustainable in its current
form in the long term, casting fresh doubts over the future of
Britain's biggest wireless operator.
The former French telecommunications monopoly and Germany's
biggest telecom operator each hold an equal 50% stake in the
business.
"The 50-50 situation isn't a long-term scheme," said Orange
Chief Executive Stéphane Richard, speaking at the Morgan Stanley
telecom, media and technology conference in Barcelona.
The mobile operator's parent companies were considering a
listing of EE last year, valued at over GBP10 billion ($16.3
billion) by analysts, and launched internal discussions but came to
the decision that the timing wasn't right.
"In the mid-term future, we will have to think with the Germans
about the evolution of EE," he added, adding that "all options are
open" including a public listing or a separate merger and
acquisition deal.
The CEO warned a decision isn't imminent. "Don't expect anything
spectacular in the short term."
Mr. Richard said Orange is happy about the performance of EE and
it is a very attractive asset for both companies.
Still, EE faces a battle for subscribers in the U.K.'s telecom
market, where it competes against Vodafone Group PLC, Telefónica SA
's O2 and Hutchison Whampoa Ltd.'s Three in wireless services.
Vodafone has recently moved to add new services to their U.K.
offer, such as broadband Internet and television, as the mobile
specialists seek bundled media to boost revenues and subscriber
growth. EE has also moved to add TV to its offer.
"We have some strategic issues ahead of us," said Mr. Richard.
"EE needs to be also in this convergent market in the future."
Formed in the U.K. after what was then France Télécom merged its
Orange brand with Deutsche Telekom 's T-Mobile in 2010, EE formerly
known as Everything Everywhere has more than 30 million customers
across the group, including on EE, Orange and T-Mobile plans.
It launched the U.K.'s first so-called fourth-generation
wireless network in October 2012 with initial coverage to 11
cities, and its 4G coverage today reaches 75% of the U.K.
population.
After lagging behind U.S. counterparts for years, European
telecom operators are investing to embrace 4G, otherwise called
long-term-evolution wireless communication, which suits faster
Internet surfing and video streaming for tablets and
smartphones.
Mobile operators are investing to bolster spending on their
networks which, they say, have suffered amid Europe's weak economy,
stiff competition and heavy regulation.
Write to Simon Zekaria at simon.zekaria@wsj.com
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