Orange logo covered with Israeli flag.
(photo credit: PARTNER WORKERS UNION)
France’s Orange SA could pay Israel’s Partner Communications, which has been licensing the Orange brand for 17 years, up to €90 million if the two decide to part ways in the next two years, according to an agreement the companies signed on Tuesday.
Details of the agreement, which were published via the Tel Aviv Stock Exchange’s information system, specified that Partner could cut off the brand license agreement in the first 12 months, and that both Partner and Orange could terminate it in the 12 months that followed.
Orange will pay Partner €40m for agreeing to the deal, which includes a detailed market study. Partner would get an additional €50m if the branding agreement is nixed within two years. It replaces the 10-year renewal of the brand agreement the companies signed in March.
The results of the market study will likely show whether Orange’s brand has been damaged in Israel following a PR firestorm earlier in June, when Orange CEO Stephane Richard reportedly told a crowd in Cairo that he wished to sever ties to Israel, a statement that Israeli officials took as an endorsement of anti-Israel boycotts. At the time of the statement, Partner said that the words “harm the value of the brand in Israel, very seriously.”
In the days that followed, Richard walked back the statement, and even came to Israel to meet with Prime Minister Benjamin Netanyahu to express his “love” for Israel.
“Our company’s vision is to connect people. That is the opposite of any involvement in boycotts or in political controversy,” Richard said on his June 12 visit.
“Our actions are not based on any political objectives, but rather on economic and business ones. It is therefore ludicrous to think that our business development plans in Israel are in any way the result of political pressure.”
Partner is likely to spend the coming months reassessing its brand strategy, and preparing to relaunch under a new label. Since the controversy, Orange has gone out of its way to reassure Israel that its decision to cut off the brand licensing agreement with Israel – the only country with which it has such an arrangement – that its decision was not politically motivated. The company has a subsidiary in Israel called Viaccess-Orca, which specializes in pay TV content, a three-person business office, and even a start-up accelerator called Orange Vab, which opened in September. Its investment fund Iris has invested in an Israeli start-up.
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