Orange Considers Potential Tie-Up With Telecom Italia

By Sam Schechner

BARCELONA--France's Orange SA is considering launching a bid to tie-up with Telecom Italia SpA in a sign that European telecommunications companies are continuing to push forward a wave of consolidation across the region.

Orange Chief Executive Stephane Richard said Sunday he is considering whether to pursue a deal to merge with financially strapped Telecom Italia, amid broader reflection on how to play a role in the wave of deal making in Europe.

"I think it would be a very attractive deal," Mr. Richard told The Wall Street Journal ahead of the Mobile World Congress in Barcelona. "We're thinking about it, but it is a purely internal discussion," Mr. Richard said.

A spokeswoman for Telecom Italia said Sunday that there were no negotiations between the two companies. French newspaper Journal du Dimanche earlier reported Orange's interest in pursuing a Franco-Italian merger to create a new European behemoth.

Orange's interest comes as the European telecommunications market is in the midst of a decade-high boom in M&A activity, with companies looking to consolidate a patchwork of operators across the region to boost profit. Last year, deals for European telecom firms totaled $130 billion, the highest since 2005.

So far this year, BT Group PLC has sealed a GBP12.5 billion ($19.3 billion) deal to buy U.K. mobile operator EE, while Hutchison Whampoa Ltd. has entered exclusive talks to buy Telefonica's U.K. operation for potentially more than GBP10 billion.

Mr. Richard didn't specify what structure any Orange bid for Telecom Italia might take. The Italian company is struggling under a heavy debt load, but had valuable assets in Brazil. French media conglomerate Vivendi SA will also have a minority stake in the company following the sale of its Brazilian assets to Telecom Italia.

Rory Jones contributed to this article.

Write to Sam Schechner at sam.schechner@wsj.com

Access Investor Kit for Telefonica SA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=ES0178430E18

Access Investor Kit for Orange SA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=FR0000133308

Access Investor Kit for BT Group Plc

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0030913577

Access Investor Kit for Telecom Italia SpA

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=IT0003497168

Access Investor Kit for BT Group Plc

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US05577E1010