Eir’s next owner is dreaming big

French billionaire Xavier Niel, who is poised to buy Eir, on his start-up campus, workplace diversity, Brexit, and digital taxation

Xavier Niel was the first in France to make an electronic box that combines internet, telephone and television services, through his company Free, in 1999. Photograph:  Lionel Bonaventure/AFP/Getty Images

Xavier Niel was the first in France to make an electronic box that combines internet, telephone and television services, through his company Free, in 1999. Photograph: Lionel Bonaventure/AFP/Getty Images

 

You don’t amass a fortune valued at more than €8 billion by being a nice guy. Yet there is something disarming about Xavier Niel’s laid-back manner, the way his eyes narrow to cartoon slits when he laughs and smiles. If he were an animal, the French telecoms and media mogul, who is set to take over the Irish telco Eir, would be a lively Labrador puppy, not a Rottweiler.

It was confirmed last month that two companies controlled by Niel – Iliad and NJJ – are acquiring 64.5 per cent of Eir. In a group interview with the Anglo-American Press Association this week, Niel said he could not comment on the acquisition until the sale clears regulatory hoops. “I like the historic operator, so I want to go in this direction,” he said of the transaction. “The operation isn’t completed. We’re waiting for the authorisations [from regulators].”

Niel is believed to be spending about €1 billion on the Eir purchase. Iliad has an option to buy out 80 per cent of NJJ’s share in 2024 at a 12.5 per cent discount. In the meantime, Niel’s priorities will probably be to increase Eir’s share of the mobile market and reduce its €2.1 billion debt burden.

The company has had seven owners in less than two decades and Niel’s expertise in telecoms could be a positive omen.

His background is unusual in France, where most wealth is inherited. The son of Catholic and Jewish parents from a modest suburb of Paris started his digital career at the age of 17, marketing soft porn on the minitel, the French precursor of the internet. His investments in peep-shows and sex-shops made him a millionaire by the age of 24.

Rechristened

Now aged 50, Niel progressed from porn to Irish phones via the 1990 purchase of a company that he rechristened with the Homeric name Iliad. He founded France’s first internet provider in 1993, then sold it just before the dotcom bubble burst in 2000.

Niel was also the first in France to make an electronic box that combines internet, telephone and television services, through his company Free, in 1999. In 2012, he undercut mobile competition by offering unlimited service for €19.99 monthly. He also owns a controlling share in Le Monde newspaper.

Niel lives in a replica of Marie-Antoinette’s Petit Trianon, with swimming pool and garden, in Paris’s 16th district. His partner, Delphine Arnault, is the businesswoman daughter of France’s richest man, Bernard Arnault, the owner of the LVMH luxury group. Niel is a discreet but ardent supporter of President Emmanuel Macron while Delphine is a friend of first lady Brigitte Macron.

In the old days, rich Frenchmen indulged in dancing girls. Station F, the world’s largest startup incubator, and 42, Niel’s school for hi-tech professionals,which is bi-located in Paris and Silicon Valley, are his modern-day “danseuses”.

Niel receives us at Station F, which he built in a former freight train station near the Bibliothèque François Mitterrand at a cost of €250 million. Macron inaugurated it in June 29th, 2017.

One of his goals in setting up Station F “was to shine a light on Paris. I wanted people to think of Paris as a hi-tech city, for brand France to be known for technology, all over the world.”

A quarter of Station F’s 1,000 startups are foreign. The five countries most strongly represented are the US, UK, Germany, China and India.

They have come to Paris “because we have a more ‘sympathique’ and open image, thanks to President Macron,” Niel says. “And maybe because England doesn’t seem very stable under Theresa May, Germany doesn’t seem like much fun with an ageing leader and the US doesn’t seem very welcoming under Donald Trump. ”

Advantage

Asked if Brexit is an advantage for French tech, Niel responds with a resounding “oui”. French entrepreneurs who went to London are flocking back to Paris, he says, bringing British and other foreign talent with them.

“The French digital economy is on its way to overtaking the UK in terms of investment and dynamism,” Niel says. “Helped by Brexit, we’ll become the leading digital nation in Europe, though we’re behind the US and China.”

Macron, Niel says, “projects an image beyond our frontiers of a young, pro-startup, pro-entrepreneur France . . . Having a dynamic young president, who was elected before he was 40, who wasn’t part of a political party, completely changed people’s image of France.”

Niel gives a clue to where French billionaires find information when he cites the new US information site Axios.

“Axios has a story today saying Macron convinced Trump to go to Davos,” Niel says. “I don’t know if it’s true, but the very fact that journalists think it’s true shows the power of image, for a country that remains five times smaller than the US . . . the perception of France has changed.”

Macron sent important signals to the business community by ending the wealth tax on capital investments, which are now subject to a 30 per cent flat tax on profits only, and the reform of the labour code, though the latter has little effect on the digital sector.

Niel believes the issue of digital taxation, which has created tension between France and Ireland, “is in the process of being solved by the companies themselves . . . my opinion as a French citizen – and I might have a different opinion if I were an Irish citizen – is that tax should be paid in the place where value is created. A certain number of companies, in particular Facebook, say they’re going to pay taxes locally. I believe Google is on the same path. Snapchat has always done it. Companies are becoming responsible because they sense that, otherwise, it will be imposed on them.”

Corporate responsibility

On the day we spoke to Niel, Macron was making the same points regarding corporate responsibility in a speech at the World Economic Forum in Davos, Switzerland.

Like Macron, Niel praises the French system of social protection. “It has a cost. I accept that. It creates social well-being. We’re last in the OECD ratings for social mobility . . . If you’re from a poor neighbourhood, you go to the worst schools . . . That’s one of the things we must change.”

Niel is at his most animated when he talks about promoting diversity and breaking socio-economic determinism through Station F and his tech school, 42. An American woman, Roxanne Varza, runs Station F. Half of the executives are female, and 40 per cent of the start-ups have been created by women.

The first 13 participants in “Fighters,” one of Station F’s 30 start-up programmes, arrived this week. “Fighters” is designed to “give a chance to people who might not otherwise have chances, to test their motivation, their desire to succeed,” says Niel. One participant, an ex-convict, has launched a start-up designed to prevent car theft.

“We dream of mixing gender, levels of education and social class,” Niel continues. “Something happens when you put 3,500 young people together in an open space. They mix, talk, contact each other. If you bring them together, you create great things.”

Dark circles under Niel’s eyes are the only indication that being a telecoms and media giant is hard work. France’s 35-hour working week doesn’t mean much in the hi-tech sector, he notes. Varza, the director of Station F, works well into the evenings.

Niel uses long working hours to test the 3,000 youths admitted to his tech school, 42. “We ask them to work 15 hours a day for 30 days,” he explains. “After three or four days, a quarter of them give up. They tell us, ‘it’s great, what your’re doing, but it’s not for me.’ I’m interested in the others, who say 15-hour days don’t bother them, who say, ‘I don’t want to depend on the state, on my past, on my social milieu. I want to depend on myself’.”

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