NJJ Capital, a private investment fund controlled by French telecoms tycoon Xavier Niel, has agreed to purchase Swiss cellco Orange Switzerland from Apax Partners for CHF2.8 billion (USD2.9 billion). The deal is subject to regulatory approval and is expected to be completed by the end of Q1 2015. In a press release from Apax, Niel was quoted as saying that his firm has been circling Orange since it was sold by Orange Group in February 2012, adding that ‘We have witnessed the successful transformation at Orange Switzerland under Apax’s leadership’ – referring to the cellco’s network modernisation, the launch of Long Term Evolution (LTE) and the development of new tariff structures and marketing strategies. The smallest of Switzerland’s three cellcos, TeleGeography’s GlobalComms Database notes that Orange represented 20.3% of the market at the end of September 2014, with an estimated 2.352 million users (2.141million excluding mobile virtual network operator [MVNO] customers).
Reuters writes that Iliad founder Niel could revisit plans to merge Orange with local rival Sunrise in an effort to compete more effectively with incumbent and market leader Swisscom, which accounts for close to 60% of the wireless market, as well as more than 50% of the broadband space. A merger between Orange and Sunrise was attempted in 2009 by former owners Orange Group and TDC respectively, but was shot down by regulatory authorities over concerns that it would reduce competition in the market. January 2014 saw the two companies enter talks regarding potential cooperative programmes such as network sharing, but the negotiations failed to bear any fruit.
Elsewhere, the announcement that Orange is to be taken over by NJJ has hurt Swisscom’s share price, which fell by more than 5% on Thursday amidst concerns that with Niel’s financial backing Orange could pile on competitive pressure for Swisscom: Niel’s Iliad sparked a price war in France with the launch of mobile provider ‘Free’ in 2012.