Wednesday February 4, 10:37 AM
UPDATE 1-Orange fails in bid to resurrect French iPhone deal
PARIS, Feb 4 (Reuters) - France's leading mobile operator Orange failed to restore its exclusive deal with Apple (NASDAQ: AAPL - news) to sell the latest version of the blockbuster iPhone in France as the Paris Appeal Court confirmed a competition watchdog's ruling.
The exclusivity deal between the U.S. group and Orange owner France Telecom (Paris: FR0010560771 - news) over the latest generation 3G device was set to run for five years, although Apple had an exit clause after three years.
On Dec. 17 the Competition Council suspended the deal, similar to ones struck by Apple in several markets, saying it risked 'serious and immediate damage' to competition on the French mobile market, due notably to its 'excessive' length.
France Telecom, which has argued the watchdog had 'put the market economy into question', said in an email it was 'surprised' at the failure of its appeal and will lodge another appeal with France's highest court, the Cour de Cassation.
WORST CASE SCENARIO?
CM-CIC (Paris: FR0005025004 - news) analysts said that in a worst-case scenario France Telecom could lose 200 million euros ($260.7 million) in sales in 2009, around 0.4 percent of total revenues, if the suspension was maintained.
But the analysts also argued in a note that a shortfall in revenue would be 'largely offset' by 'significant' savings in promotional costs including handset subsidies.
A France Telecom spokesman was unable to respond immediately to the analysts' claims.
France's No. 3 operator Bouygues Telecom, which filed the original complaint with the Competition Council, welcomed the Appeal Court ruling and said it was in talks with Apple and expected to sell the iPhone itself 'soon.'
A spokesman for the second biggest player, SFR, owned by France's Vivendi (Paris: FR0000127771 - news) and Britain's Vodafone Group (LSE: VOD.L - news) , also welcomed the decision but said it needed a distribution contract with Apple to sell the device.
France Telecom lodged its original appeal arguing that the watchdog's decision placed France in a 'radically different position' compared to Apple's iPhone exclusivity deals in Britain, Germany and Spain.
The Competition Council said that while it was not fundamentally opposed to exclusivity deals, future agreements on the iPhone would be capped at 3 months.
At the time it announced the suspension of the deal the Competition Council said a 'conservative estimate' put Orange's 3G iPhone sales at 220 million euros ($308.2 million) between its launch on July 18 2008 and Nov. 5.
($1=.7672 Euro)
(Reporting by Matt Gil; Editing by Hans Peters) Keywords: IPHONE/FRANCE
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