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It tried to court boycotters — but Orange got squashed

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November 24, 2016 23:28

The CEO and chairman of Orange, Stephane Richard, knew he would be given a hard time at a press conference with Egyptian journalists in Cairo last week.

Orange - formerly known as France Telecom - is now the principal shareholder in Mobinil, the first and one of the largest mobile phone operators in Egypt, but the company has suffered from image problems in the Arab world.

In January 2011, as the "Arab Spring" revolution began, Mobinil obeyed an order from former president Hosni Mubarak to shut down all its services in Egypt. For five days after the mobile blackout, Mobinil and the other phone companies only briefly renewed their service so that the Egyptian military could send out text messages ordering people to stay at home and not join the demonstrations.

But Mr Richard had a more recent PR headache as well. Pro-Palestinian groups had been calling for a boycott of his company due to the presence of communication masts in Israel operated by a firm using the Orange brand. Orange had also been attacked for providing IDF units with phone charging stations during last summer's Gaza campaign.

Asked about the boycott demands, which have proliferated on social media in Egypt in recent weeks, he said: "We want to be one of the trustful partners of all Arab countries." Then he gave a convoluted explanation of how Orange in Israel "is certainly not a financial interest" and that if they could, the company would leave Israel "tomorrow."

Mr Richard wasn't lying. Unlike in Egypt and many other countries where Orange is directly involved in operating mobile phone networks, the link with its Israeli counterpart is limited to branding. Partner Communications, the third cellular operator to set up shop in Israel, used the orange square logo to give off an air of international competence, but the company is as Israeli as its rivals.

If the French company decides to cut its ties, it will have to negotiate a heavy exit-fee for breaking a 10-year contract, which was renewed only a few months ago. That would mean tens of millions of euros, enough to pay for a major rebranding campaign and more - a welcome boost to Partner's balance sheet.

Orange would probably remain heavily invested in Israel whatever the outcome. In 2008 it purchased an Israeli firm that develops digital multi-channel television platforms that it uses in its French network. Last year, it set up a start-up "accelerator" in Israel called Orange Fab, through which it offers mentoring and funding to budding high-tech firms.

For Mr Richard, a former chief of staff for IMF head Christine Lagarde when she was finance minister in Paris, and a protégé of former president Nicolas Sarkozy, there was also a political storm awaiting at home.

The French government is opposed to BDS, and Mr Sarkozy, now planning his campaign to retake the Elysee, was just about to embark on a high-profile visit to Israel. The government controls 25 per cent of Orange and Mr Richard cannot afford to anger his patrons.

A retraction, a public apology, a statement that "Orange does not support any form of boycott, in Israel or anywhere else in the world", does not seem to have been enough. Mr Richard will travel to Israel, possibly as early as next week, to deliver a personal apology and promise that Orange will never leave. But how will he explain this to his Egyptian customers?

November 24, 2016 23:28

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