The largest phone company in France, Orange SA, said that if the Telefonica SA and Royal KPN NV bid to merge their German assets receives regulatory approval, there would be a major shake up in the telecommunications industry in Europe.

According to Orange SA CEO Stephane Richard, in an interview in Paris said, "If Germany accepts to go from four carriers to three, it will create an earthquake in Europe. It will force other countries to reconsider their positions on consolidation."

The takeover of E-Plus KPN by Telefonica Deutschland Holding AG, which uses the 02 brand, would be reviewed closely by European competition authorities. There are over 100 carriers in the European phone market and many are trying to keep their heads above water. The approval of the merger between the two would create the biggest wireless operator in terms of customers in Germany. This would also open the door to encourage many smaller players to merge with one another in the fragmented market.

For its part, Orange would be seeking to strengthen its market position in countries such as Spain and Poland as well as acquire fixed line facilities in Belgium and Romania. In the last two European countries, Orange sells only wireless services.