Orange Hires Peacemaker

Yankee CEO brought in for rapprochement between French and UK wings, in an investor-friendly move

February 14, 2003

2 Min Read
Orange Hires Peacemaker

Relations between Presidents Bush and Chirac may be a tad hostile at the moment, but France Telecom SA (NYSE: FTE) has done its bit to maintain transatlantic relations. The French incumbent has hired American telco veteran Solomon Trujillo, 51, as the new CEO of its mobile subsidiary Orange SA (London/Paris: OGE), where he replaces Jean-Francois Pontal (see Trujillo Named CEO of Orange).

The move casts the American in the role of peacemaker between Orange’s French and British factions. Tensions between Orange personnel in the UK and France stem from France Telecom’s acquisition of Orange in 2001 and the subsequent integration with its Itineris unit, now known as Orange France.

“Trujillo’s been chosen so that neither Orange France nor Orange UK feels alienated -- it’s about building bridges,” said a London-based equities analyst, who requested anonymity. “It doesn’t really matter that he knows nothing about European wireless, because there are other people who can run the business for him. He’ll be focused on auditing and cost cutting.”

Ah, cost cutting. France Telecom has already done some of that for him in the form of a major cut in capex, as the major wireless infrastructure vendors will have already noted (see Orange Shackled by FT).

And Trujillo wasn't the only one to warm a new seat at Orange today. Wilfried Verstraete, formerly CFO of France Telecom’s ISP subsidiary Wanadoo SA, will take over as the new Orange CFO following the resignation of British-based Simon Duffy (see Verstraete Becomes Orange CFO). Orange’s well-regarded COO Graham Howe is also on his way out.

The aforementioned financial analyst applauds the selection of Verstraete as CFO, citing his good track record and popularity with investors, and says it's no surprise that Howe’s going. “I figure [he will join] Hutchison 3G UK Ltd. if he doesn’t have a non-compete clause in his contract. [Hutchison's] CEO, Colin Tucker, was previously COO at Orange.”

Another London equity analyst, who also requested anonymity, said Trujillo’s appointment is uninspiring. “The fact that he’s American suggests they’re trying to hold hands with investors and show this is not some French stitch-up job. It’s probably not such a bad thing that he doesn’t know much about Orange.”

The markets reacted favorably to the news, with Orange up 10 pence, or 2.5 percent, to 497.50 pence in morning trading on the London Stock Exchange. Rival Vodafone Group plc (NYSE: VOD) dropped half a penny, or 0.43 percent, to 114.75 pence. The FTSE 100 was up 0.24 percent over the same period.

— Gabriel Brown, Research Analyst, Unstrung

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