Business | Property
Unlocking human power: France Telecom keeps eyes on prize
- Financial Times
- Published: 00:00 December 1, 2009
No one can say that France Telecom chairman Didier Lombard has had an easy time since returning from his summer break.
The suicide crisis that engulfed the group in France — 26 employees tragically took their lives over the past 20 months — has provoked a national debate about work-life balance, the ripples of which have extended well beyond the former incumbent telecommunications group.
Earlier this autumn, the veteran telecom boss resisted calls for his resignation. But all these pressures and uncomfortable distractions do not seem to have prevented Lombard from keeping at least one eye firmly on the competitive challenge of maintaining France Telecom's position in the leading pack of European operators.
In September, the group's Orange subsidiary pipped Vodafone and Telefonica to the post by scooping Deutsche Telekom's T-Mobile UK subsidiary into a joint venture that will put Orange in the driving seat in the key UK mobile market.
Having failed last year to kick-start that process with a traditional chequebook M&A approach to Sweden's TeliaSonera, France Telecom and its advisers, Perella Weinberg, have since engaged in some clever lateral thinking and have come up with the joint venture structure.
Wednesday's deal in Switzerland to merge Orange and Sunrise, the operator owned by Denmark's TDC will create that country's second-largest mobile operator. It lends further credibility to the idea that the French group is setting the pace in tidying up Europe's often messy mobile landscape.
It is also perhaps launching a new trend in the consolidation process by trading or combining assets in joint structures in preference to breaking out the cheque book.
True, Lombard this time has agreed to pay the Danes 1.5 billion euros(Dh8.29 billion) to move to a controlling 75 per cent stake in the combined Swiss business. But this sum is small compared with the 20 billion euro-plus France Telecom was preparing to cough up for TeliaSonera before it wisely withdrew its offer after the Swedes overplayed their hand.
French politicians and unions have ruthlessly exploited the France Telecom suicide crisis for maximum populist advantage and there were concerns that this might begin to impact France Telecom's performance and strategic focus. So far this does not seem to be the case.
Walker review
It is premature to declare Sir David Walker's review of governance at Britain's biggest financial companies a success. But it is certainly not the failure that it could have been. Indeed, it is better than that.
Sir David has dodged the biggest pitfalls. First, his review — out Thursday — is no whitewash.
To his credit, Sir David has not pulled back from recommendations on the publication of pay levels or the imposition of special risk committees. Almost his only concession since the summer has been to allow some flexibility on the time committed to boards by non-executives. That seems sensible.
Why, then, is it premature to call the report a success? Mainly because some of the core recommendations — notably on disclosure of remuneration and deferral and clawback of incentive payments — will only stick if they can be applied around the world. The biggest challenge Sir David poses to the UK government and its regulators is to ensure that where his review leads, international partners follow.
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