Move over Chris Gent: here comes Hans Snook. That was the message as France Telecom announced it was buying UK mobile phone operator Orange from Vodafone AirTouch for $46 billion on 30 May. Snook, the Orange chief executive, made no bones about hoping to eat his former owner's lunch. "We want to be the biggest rival globally to Vodafone that they could possibly imagine," he said.
Indeed, with France Telecom's financial backing, Orange could become a formidable combatant in the European telecom arena. Michel Bon, chief executive of France Telecom, has put up big bucks. But he's making a huge bet on Snook's performance. In a gutsy move, Bon is putting a major chunk of his company under Orange's chief executive. The combined companies had total sales of $8 billion last year.
Bon is gambling that the maverick Snook is the entrepreneurial executive needed to lead his own stodgy mobile effort into the future. He is putting all of France Telecom's other mobile assets, valued in the $110 billion range, under Snook's management, and eventually under the Orange brand.
France Telecom's mobile holdings include 100 per cent of France's Itineris, 50.9 per cent of Mobistar in Belgium, and 80 per cent of Dutchtone in the Netherlands.
New Orange, as the company is being called, will be number two in European mobile telecoms, with a total of 21 million controlled subscribers compared with Vodafone AirTouch's 38 million. "Snook must be absolutely delighted. He has found the big controlling shareholder that won't interfere with his vision," says Jim McCafferty, a telecom analyst at SG Securities in London.
Orange gets the green light
Bon is giving Snook the green light to go after his UK rival. He is promising a flotation of 10 per cent to 15 per cent of Orange's stock on the London, Paris, and perhaps New York Stock Exchanges this year, or early 2001. That will give Snook a market capitalisation of about $150 billion to play with, and stock that he can use for takeovers (Vodafone's market capitalisation is $259 billion). Still, Vodafone boss Gent doesn't seem overly perturbed.
"We've always been ready for competition," he says. "Unlike France Telecom, we never had a [mobile] licence as our birthright."
Snook may be just the sort of irreverent boat-rocker that France Telecom needs. He is an ex-hippie who started in telecoms in Hong Kong, running a local paging company which was acquired by conglomerate Hutchison Whampoa.
That move eventually produced an assignment in 1993 to straighten out Hutchison's loss-making UK telecom assets. Six years later, Orange is a $46 billion company, giving Snook the aura of a magician and plenty of market value of his own.
Sneering at Snook
But not everyone in the European telecom community is sanguine about Snook's suitability to lead a European or, perhaps, global company. Critics say that Snook's success has been limited to the UK, and that he has not established himself as a world-class dealmaker in a league with Gent.
"He doesn't deliver quite as good a game as he talks," says an industry source of Snook. "He has been a boat on a rising tide."
But Snook may surpass Gent as a marketer and salesman of the mobile future. He has positioned Orange as a kind of counterculture brand against incumbents BT Cellnet and Vodafone. Despite changing owners twice in recent months, the company continues to shine, beating both rivals at signing up new customers.
He has also been a leader in trumpeting the possibilities of using mobile phones to deliver an array of web-enabled services. Gent only embraced that concept during his prolonged siege of Mannesmann.
Indeed, Snook has the money to go along with his vision of creating a global mobile empire. As long as he keeps Bon on board, that's likely to be a potent combination.
By Stanley Reed, with Kerry Capell and Heidi Dawley in London and Stephen Baker in Paris. First published in Business Week. Copyright 2000 by the McGraw-Hill Companies Inc. All rights reserved.
- How the 'new Orange' will look
Assets Combines the original Orange with France Telecom's Itineris and its other wireless businesses.
Scope Europe's second-largest wireless company, with 21 million subscribers in 16 countries.
Management Retains Orange chief executive Hans Snook and deputy chief executive Graham Howe.
Financials The combined companies had total sales of $8 billion last year.
Challenge To take on Vodafone for leadership in Europe and possibly the world.
Source: Company Reports, Business Week
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