Published On: Tue, Jun 30th, 2015

Orange Redoes Brand Licensing Agreement With Partner Costs Up To $100 Million If it Leaves Israel


Following the political storm generated by Orange CEO Stéphane Richard‘s comments in Egypt supporting a boycott of Israel (“I wish I could dump Israel tomorrow, ” he said), Orange has signed a new two year agreement with Israeli company Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR), which licenses the brand name in that country.

After Richard’s subsequent retraction of his words and visit to Israel to smooth things over, Partner has announced an agreement with Orange which creates a new framework for their relationship.

The new agreement stipulates that Orange will pay up to $100 million to Partner, a sizable chunk of which will be used to help Partner rebrand itself in the wake of Orange’s departure.

Pierre Louette, Orange’s deputy CEO, told AFP: “The discussions were pragmatic, conducted in a positive atmosphere, and the two parties reached a mutually satisfactory agreement, ”

Globes report says that the two companies will use a detailed market study to assess Partner’s position within the dynamics of the Israeli telecommunications services marketplace.
The agreement provides both Partner and Orange the right to terminate the current Orange brand license agreement. If Partner does not exercise its right to terminate within 12 months, either Partner or Orange may terminate the agreement during the following 12 months, according to Globes.

In addition, says Globes: the agreement provides for total payments of €40 million to Partner from signing the agreement until completion of the market study, and an additional €50 million should the brand license agreement be terminated within 24 months. Amounts paid to Partner will be made over eight quarters against marketing, sales, customer services and related expenses.

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