The boss of Orange explains why it's offering to buy Spanish telecoms operator Jazztel for around 3.4 billion euros, a deal that could help the French company jump ahead of rival Vodafone in the country's mobile market. (Rough Cut only - no reporter narration)
(ROUGH CUT - NO REPORTER NARRATION) Orange has offered buy Spanish telecoms operator Jazztel for around 3.4 billion euros, a deal that could help the French company jump ahead of rival Vodafone in the country's mobile market. Orange's offer for Jazztel is at 13 euros per share in cash, valuing it at 3.4 billion euros. The French company will pay for the acquisition with hybrid bonds and a capital increase of up to 2 billion euros. Jazztel Chairman Leopoldo Fernandez Pujals has agreed to sell his 14.5 percent stake. Consolidation in the Spanish telecoms business has been brewing for months, driven by tough competition and falling prices during the country's recession. Gervais Pellissier, Orange chief executive officer delegate, United Kingdom JV and operations in Europe, explained the reasons behind the deal at a news conference in Madrid on Tuesday. (SOUNDBITE) (English) GERVAIS PELLISSIER, CHIEF EXECUTIVE DELEGATE , UNITED KINGDOM JV AND OPERATIONS IN EUROPE, SAYING: "Clearly for us in Orange, Spain is a great market, this is now clearly the second market after France for the Orange group and we think the move we have been announcing yesterday night is done at the right time for many reasons. One, because the telecom market in Spain has started to consolidate and we think we ahve to participate in that consolidation. We also think we are investigating again at a time where we hope, and we see signs, that the Spanish economy is recovering." "Our view is that, by consolidation we save costs, so operators re-establish a better balance in terms of costs for the infrastructure. This is also the purpose of network sharing, the network sharing agreement we have with Vodafone on mobile, but we see also that by going quicker, the three of us - Telefonica, Vodafone and now Orange and Jazztel together - we will further expand the broadband usage in Spain and we can count on very high broadband usage for the custimers to spend more, not spend more in the excess, but to spend more in other stuff." "This is not a consolidation which is destroying jobs, this is the deflationary price pressure in this industry which has been introduced by a certain extent, to high competition. We have seen the moves in Europe, moving from four air operators to three in many countries, not to mention the UK, Ireland, the potential sale of Yoigo here maybe some day or the other, maybe not now but in the future, Austria etc."