Orange launches Totem, a company dedicated to the management of its pylons

The telecoms operator is playing the card of European consolidation through infrastructures, without however managing to reassure the financial markets on the solidity of its model.

Orange cuts a new card in its development strategy. On the occasion of the publication of its annual results, the historical operator announced the creation of a new entity: Totem. This “tower company” brings together 25,500 Orange high points, including 17,000 in France and 8,500 in Spain. These are both pylons and roof terraces, these precious locations on which telecom operators install the antennas that feed their mobile network. These sites are sometimes rented at a high price.

Bouygues Telecom, SFR and Free have already carried out similar operations, creating tower companies which they have, in part, sold to third parties. Their main objective was to free up cash to deleverage or finance investments. Orange is on the contrary seeking to keep control of Totem, in order to play a new role in the network infrastructure market in Europe. The observation made by the group is simple. The telecom operators are jostled on the financial markets. Orange’s valuation is much lower than that of most Tower Co, which puts a strain on its ability to make acquisitions by financing them through share swaps.

By creating an ad hoc company, the incumbent offers itself a new bargaining chip to participate in the consolidation of the market. The German Deutsche Telekom and the British Vodafone have just taken similar steps. Stéphane Richard, CEO of Orange, does not exclude a European consolidation of telecoms, but at the level of tower co and not of parent companies.

Orange could also use its tower co to strengthen itself in this very lucrative telecom infrastructure management market. It would compete with the champions of the sector, such as Cellnext. Growth will also be organic, with the need to continue to deploy 4G and 5G networks in France and Spain. Additional Orange assets in other countries could also integrate it. “Totem is the first stone of a new strategic pillar at Orange “, Summarizes Stéphane Richard, who insists on the fact that his group”does not need cash ».

This structure is also a means of circumventing European legislation, considered too restrictive in terms of consolidation. “The Brussels doctrine on competition has not changed for twenty years, with an obsolete vision of the definition of relevant markets. Telecoms are not a separate bubble in this ecosystem “. The operators are in direct competition with the Gafa on entire areas of their activities, starting with the couriers.

Over 7 billion

With Totem, a new field of possibilities is offered to Orange. The entity could even be the subject of an IPO. If the group is careful not to officially comment on a valuation, that of Totem would be between 7.2 and 8.7 billion euros, based on the most recent transactions.
Orange, like most telecom operators, has demonstrated the resilience of its model in times of crisis, driven by the growth in digital uses. The group published a turnover of 42.2 billion euros, up 0.3%. , in the Middle East and to a lesser extent, in France. Spain weighs down the group’s European performance. In France, the incumbent operator is continuing to invest in networks and continues to gain customers in fiber. With 4.3 million subscribers, it dominates the latter market. Orange, which has not appealed for state aid, announced the distribution of a dividend of 0.70 euros per share, without succeeding in putting a smile on the face of the financial market. The title fell 3.5% to 9.70 euros.


SEE ALSO – “France is the country with the greatest number of kilometers of fiber”, welcomes Gabriel Attal.

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