FT and TDC agree to merge Orange Switzerland and Sunrise

25 Nov 2009

France Telecom (FT) and TDC have announced that they have reached an agreement to combine their respective Swiss subsidiaries, Orange Communication (Orange Switzerland) and Sunrise Communications. FT will pay EUR1.5 billion (USD2.24 billion) to TDC and, as a result of a series of steps, become a 75% shareholder in the combined entity, with TDC holding the remainder.

With approximately 3.4 million mobile and 1.1 million fixed and broadband customers, the merged company will account for around 38% of the mobile telephony market and 13% of the country’s fixed broadband connections. For 2008, it would have generated total pro-forma revenues of CHF3.1 billion (USD3.06 billion) and EBITDA of CHF809 million. Gervais Pellissier, France Telecom deputy CEO and CFO, 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.’

The combined entity will have a share buyback programme targeted at TDC’s 25% stake, to be executed at the discretion of the board using cash generated by the company. Furthermore, TDC will have the right to sell its stake to third-parties from the second anniversary of closing or to do an initial public offering of the company from the third anniversary of closing. In addition, FT will have an option to buy TDC’s shares from the first anniversary of closing at a minimum value of EUR1.2 billion. Completion of the transaction, which is scheduled to close in mid-February 2010, will be conditional upon the approval by the relevant competition and regulatory authorities.