Orange would cut Israel link if not for risk of penalties

Jun 3, 2015, 12:48 PM

CAIRO (AP) — French telecoms giant Orange SA would end its relationship with an Israeli operator that pays to use its name “tomorrow” if it could, but to do so would be a “huge risk” in terms of penalties, its CEO said Wednesday.

Speaking at a news conference in Cairo to lay out plans for the years ahead in Egypt, Stephane Richard said his company intends to withdraw the Orange brand from Israel as soon as possible, but that the move would take time.

“I am ready to abandon this tomorrow morning but the point is that I want to secure the legal risk for the company. I want to terminate this, once again, but I don’t want to expose Orange to a level of risk and of penalties that could be really sizable for the company.”

French human rights groups have been pushing their government, which has a quarter stake in Orange, and the company itself, to end the relationship over Partner Communications Ltd.’s activities in Israeli settlements. The settlements, built on land the Palestinians want for a future state, are seen as illegitimate by the international community.

Under the Orange name, Partner has also been the target of international protests over its sponsorship of Israeli military units that took part in last year’s Gaza war. Many local companies do such partnerships in Israel, where military service is mandatory.

A broader international movement known as “BDS” is calling for boycotts, divestment and sanctions against Israel over its treatment of the Palestinians. Israel says the BDS movement is not about the occupation of Palestinian territory, but rather a campaign to delegitimize the Jewish state.

At the news conference, Richard explained that the use of the Orange brand name in Israel dates back to the 1990s, under a contract inherited by the group when France Telecom acquired Orange. Recent negotiations have put Orange in a position where it can terminate the contract in the future, but at the moment, the legal framework is not favorable.

“Sorry to say, but a dispute with (a) partner when you have zero legal position in Israeli courts is not something that I would recommend for my company. I am not going to pay hundreds of millions of euros only because I would have (to) take a risk, a huge risk, in terms of the penalties that we could have if we entered into this kind of brutal process.”

Richard said his company’s stance on the matter was the result of its sensitivity to Arab countries.

“I know that it is a sensitive issue here in Egypt, but not only in Egypt… We want to be one of the trustful partners of all Arab countries.”

He added that the brand fees from the contract with Partner were low compared to the size of Orange, saying that “the interest for us is certainly not a financial interest.”

“If you take those amounts on one side and on the other side the time that we spend to explain this, to try to find a solution and the consequences that we have to manage here but also in France, believe me it’s a very bad deal,” he added.

The statements, which follow the uproar over a recent aborted bid by the Palestinians to expel Israel from world soccer federation FIFA, are likely to stoke anger in Israel.

In an early reaction, Yair Lapid, head of the opposition Yesh Atid party and a former finance minister, described Richard’s statements as “hypocrisy of the highest order,” and called on the French government to distance itself from them.

“I don’t remember him having a problem making money here and profiting from Israeli citizens,” he said in a statement. “The State of Israel is an island of sanity in this difficult neighborhood and we certainly won’t accept lessons in morality from someone so self-righteous and detached.”

At the conference, Richard said Orange invests around 2 billion Egyptian pounds ($260 million) in Egypt annually, but that it was ready to ramp that up when opportunities arrive, notably a chance to get in on a faster, 4G mobile phone network.

Richard met with Egyptian Prime Minister Ibrahim Mahlab to lobby against opening up the telecommunications network to a fourth operator. He said he explained that it was not in Egypt’s “best interest” to add another company to the mix, given the need to spur investment and boost new technologies like 4G.

___

Associated Press writer Josef Federman in Jerusalem contributed to this report.

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Orange would cut Israel link if not for risk of penalties