(Adds Vodafone decline to comment, analyst reaction)
PARIS, Dec 6 (Reuters) - Orange, France's largest
telecoms operator, and Britain's Vodafone discussed a
merger of equals between mid-2020 and early 2021 but then
abandoned the project due to French opposition, BFM TV reported,
quoting sources.
The French state, which owns 23% of Orange, was wary of
losing some control and seeing the headquarters of the new
company move to London, BFM said, adding that the two firms
might still be discussing a smaller scale alliance.
Orange and Vodafone both declined to comment on the report.
The French Finance Ministry did not immediately respond to
requests for comment.
A merger between Orange and Vodafone would have created
Europe's biggest telecom operator with 85 billion euros ($96
billion) of revenues, BFM said.
Martin Vial, head of the French state shareholding agency
APE, said this year that France could make changes to its stake
in telecoms company Orange in the medium term.
Both companies have extensive operations in Europe in
Africa, with competing operations in Spain, Romania, Egypt and
Democratic Republic of Congo.
Analysts at Jefferies noted that in relation to the cited
objections of the French States, Stephane Richard's departure
from Orange had now been confirmed and the Netherlands had been
suggested as a compromise headquarters location.
"Still, we think that towers (mobile infrastructure) and
Spain service companies would be less politically charged
scenarios," they said.
Orange finance chief Ramon Fernandez told the Morgan
Stanley TMT conference last month that France would "inevitably"
see the number of telecom operators fall from four to three,
adding that recent take-private deals by two of them, Iliad and
Altice, could improve conditions for a merger.
($1 = 0.8857 euros)
(Reporting by Gwenaelle Barzic and Paul Sandle, Writing by
Benoit Van Overstraeten; Editing by Edmund Blair and Louise
Heavens)
Vodafone (VOD)