Orange will be valued at E55-65 billion after its forthcoming IPO.
Orange is seriously suffering from the backlash against telecoms stocks. Its market capitalization is now less than half its value when France Telecom purchased the company last May. Since then investors have panicked that the high cost of 3G licenses and the subsequent investment in network infrastructure will turn mobile companies from liquid gold into vegetable soup.
However, despite the depressed market, Orange has little choice. France Telecom desperately needs the cash. The French operator bought Orange for E33 billion the IPO will raise around E8 billion. France Telecom won’t recoup its entire outlay, but will certainly attract sufficient investors.
However, will mobile stocks ever recover from their giddy heights of 2000? Datamonitor estimates it will take a well managed European operator six to seven years to make a return on its investment.
But Orange has more behind it than eventual 3G market growth. It has made great strides in the UK GSM market and will soon overtake the current market leader. And then there’s the Orange brand. Even if the disappearance of the charismatic Hans Snook is a great loss, the firm will thrive thanks to the Orange brand. Orange, although only currently strong in the UK and France, will roll out across Europe and the rest of the world over the coming years. The brand is now operational in 19 markets. Although in many countries it is only just emerging, it has every potential to replicate its UK success.
With the foresight to invest in these unsaturated and growing markets, Orange will be one of the major mobile players in the 3G future. It might be feeling pulped at the moment, but there’s still plenty of juice.
