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Orange CEO says Jazztel offer to create industry 'champion'

Orange's offer for Spanish telecom operator Jazztel would create a "champion in the industry," by merging two leading players in the Spanish telecoms market, said Chief Executive Officer Stefane Richard.

Orange made a 3.34 billion euro ($4.3 billion) offer for Spanish telecoms operator Jazztel this week. The telecoms giant expects to make 1.3 billion euros in cost savings from a deal, due mainly to cost-cutting and network investments.

Balint Porneczi | Bloomberg | Getty Images

However, Richard said that it was currently "too early" to give details about the exact proportion of hybrid bonds and a capital increase that will be used to finance the acquisition. It depends on the proportion of adjusted cash available as well as the response of shareholders, he said.

It will allow the company to increases its market share, the company said in a statement.

"Spain is a key market for Orange," Richard told CNBC. "It's the second country for the group's operations and it's a country where we have been very successful in recent times."

Spain's economy continues to recover while France's faces headwinds. The composite Purchasing Managers' Index (PMI) for the euro zone showed output in France fell for the fourth consecutive month. However, in Spain, business activity continued to grow.

"Convergence"

"Spain, as with other markets in Europe, needs consolidation within mobile and between fixed and mobile," Richard said. "Orange would take any opportunity if it creates value for its shareholders to play this consolidation."

However, he said that the company isn't in negotiations with any other operators.

In 2013, 20 telecoms deals valued at $1 billion or more were announced in EMEA (Europe, Middle East and Africa), for an aggregate value of $106.3 billion – the highest level since 2005, according to data from Dealogic.

There are more than 120 telecoms operators in the European Union, according to Louette, with each of the 28 member countries having around four-to-six domestic players.

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