French telecom Orange says it ‘ultimately’ will pull brand out of Israel

Reporting from Jerusalem —  The French telecom company Orange said Thursday that it “ultimately” planned to pull its brand name from Israel, giving a boost to an international boycott movement while enraging the Israeli government and the local franchisee.

In a news release from Paris, the company said it wished to “ultimately end this brand license agreement.” It insisted it was making a business decision, saying it did not want to maintain the brand’s presence in countries where the French company does not actually operate, as is the case in Israel.

The statement capped a tense 24 hours after a statement by Orange Chief Executive Stephane Richard at a Cairo news conference Wednesday that the company would love to terminate “tomorrow” the contract granting the Israeli cellular company Partner Communications Ltd. use of the Orange brand. He added, however, that the legalities would have to be sorted out or the French company would incur staggering expenses.

Already on the defensive in the face of an international movement to boycott Israel for its policies in the West Bank — including a failed bid to have the country suspended by the international soccer organization FIFA and a recent British National Union of Students vote to support the boycott movement — Israeli government officials were infuriated by Richard’s remarks.

Although the boycott movement is growing, Richard’s comments caught the government by surprise. Deputy Foreign Minister Tzipi Hotovely convened an urgent meeting Wednesday night, after which she sent Richard a letter seeking clarification of his comments and his company’s policy.

“I appeal to you to refrain from being party to the industry of lies which unfairly targets Israel,” she wrote.

Israel’s ambassador to France, Yossi Gal, sought clarification from the French government, which owns 25% of France Telecom, Orange’s parent.

In meetings with visiting diplomats in recent days, Prime Minister Benjamin Netanyahu repeatedly rejected calls for boycott and called them hypocrisy.

The cellular carrier known in Israel as Orange is in fact Partner Communications, a wholly Israeli company and not a subsidiary. Partner uses Orange’s name and related marketing features such as the logo, according to the Israeli company’s chief executive, Haim Romano.

The Israeli company employs about 3,500 people and has nearly 3 million customers in a nation where nearly 95% of families own at least one cellphone. According to estimates, Partner pays the French company nearly $4 million a year for use of the Orange name, which it may now have to change.

According to Richard, a new contract was recently negotiated that allows for early termination of the deal.

“We are surprised, disappointed and very, very angry,” Romano said in interviews Thursday. Emphasizing that the renewed contract allowed the Israelis use of the brand name for 10 more years, Romano said his company was weighing legal options including suing Orange for financial and other damages it may suffer, including possibly having to rebrand the Israeli company.

“We have a contract and we expect it to be kept,” Romano said. “There is no political or other reason to break it.”

The Israeli company’s stock took a small dip in the Tel Aviv Stock Exchange on Thursday.

Several hundred employees at the company headquarters in Rosh Haayin held a solidarity gathering, waving flags in support of the company and draping its international trademark logo, the Orange square, with a huge Israeli flag.

But by evening Orange had announced its intent to sever ties with the Israeli company.

“I will not be deterred by threats,” Partner owner Haim Saban told Israeli media Thursday. The Egyptian-born, Israeli American billionaire said the company was considering its legal moves and promised to continue working in and for Israel.

Speaking in Tel Aviv on Thursday, Netanyahu said Israel would not forgive what he called the “absurd drama” of being penalized for defending itself against terrorism, only to suffer boycotts.

He urged the French government to “publicly repudiate the miserable statement and miserable action by a company under its partial ownership” and called sympathetic countries of the international community to unequivocally declare they reject any boycotting of Israel.

Sobelman is a special correspondent.