Orange is fighting a long slow battle for survival in Belgium, but back in February it received a bit of a blow, with Telenet signing up local cable conglomerate VOO, as an MVNO. This used the Base mobile network which Telenet acquired from KPN when previously VOO had been with Orange.
If Orange does not acquire the municipal run VOO, there is every chance that Telenet will – despite the fact that Liberty Global right now is more interested in selling in Europe, than buying – which is why this week Orange has expressed an interest in acquiring VOO.
For a long time it was obvious that Orange, as a purely mobile operator, had a limited future in Belgium, a bit like both Vodafone and T-Mobile had been in the Netherlands, until Vodafone merged with the converged cable operation Ziggo. Orange’s first attempt at becoming a converged quad play in Belgium was to launch its own TV service via satellite DTH, but it had no broadband.
But working quietly in the background, Orange and others have managed to convince Belgium to change its laws, opening up cable players in a big European experiment, to offering unbundled customer access across its cable, and as of about 2013 Orange began to offer video and internet over cable and fiber – through both the major cable suppliers, Liberty Global owned Telenet and VOO in Wallonia and Brussels.
By winning VOO and combining that with a growing fiber ownership and its second placed MNO, Orange can creep ahead of Telenet to challenge incumbent telco Proximus.
It would inherit a network across 24 municipalities in Wallonia and 6 in Brussels, covering 5,000 km of HFC infrastructure and 500km of fiber-optic networks and more than 800,000 broadband and pay TV customers.
VOO is owned by Brussels-based BruTele and Wallonia utility firm Nethys (formerly Tecteo) and 5 years ago it almost merged with the freshly independent Numericable Belgium. As this deal faltered Liberty Global moved to buy Numericable and last Summer it began overtures to VOO itself.
There is a long history here, with Telenet and VOO combining to blanket all of Belgium with WiFi Homespots and using WiFi offload and an MVNO to challenge cellular offerings. Between them they have 1.5 million Homespots in Belgium – yet another threat to Orange. The February deal where VOO dumped the Orange MVNO, essentially changed the balance of power in Belgium making Telenet the clear second place to incumbent Proximus.
Given that Liberty Global has managed to merge multiple cable companies in the Netherlands, against previous EU rhetoric, to present a serious challenger to the incumbent Telco KPN, and then go on to merge it with a cellular operator, it suggests that something similar can be done in Belgium to attack Proximus for that number one position. If that happens Orange definitely has the potential to be edged out of the market.
Which is why Orange Belgium has confirmed local press reports that it is interested in acquiring VOO – made up of two owners, Liege-based Nethys and Brutélé in Brussels.
Orange has simply talked about a “declaration of interest” brought about as Telenet and VOO get ever closer. But it wants to do the deal without actually buying out the cable assets and talks of an “industrial partnership” to create a convergent national telecoms operator. Unless Orange dips into its pockets and grabs this opportunity, it is likely that Telenet will move to merge the final cable assets outside its reach in Belgium in a similar way to how it completed the deal in the Netherlands. It could then try to buy out Orange in Belgium and go on to depose Proximus as the leading network there.
In the past the European Commission principles around competition have prevented such moves, but the eyesore that is the Ziggo deal, has set a precedent that is tough to resists, as the European Commission has lost its way on the subjects of anti-trust and competition.