June 30, 2015 / 7:58 AM / 2 years ago

Orange, Partner Communications set terms to end brand deal

Israeli flags hang next to the logo of Orange mobile company in a store at a Jerusalem mall June 5, 2015.Ronen Zvulun

PARIS (Reuters) - French telecoms group Orange and Israeli mobile phone operator Partner Communications said on Tuesday they had agreed terms to end their licensing deal following a public row in Israel, but Orange said it was still committed to Israel.

Israel protested to France after Orange's Chief Executive, Stephane Richard, said earlier this month he would terminate the licensing arrangement with Partner "tomorrow morning" if the contracts allowed.

Specifically, the controversy surrounds economic activities in Israeli settlements of the occupied Palestinian territories which France and the European Union consider illegal. Orange is 25 percent owned by the French government.

Richard later apologized to Israeli Prime Minister Benjamin Netanyahu and said his comments, made during a visit to Egypt, had been misinterpreted to suggest that he supported an outright boycott of Israel for political reasons.

Orange later explained the comments as reflecting a broader desire and strategy of not licensing its brand where it was not directly in control of the business.

Partner pays a fee to use Orange's brand in Israel.

Under the new deal, if Partner does not exercise its right to terminate their brand agreement within 12 months, either Partner or Orange could terminate it during the following 12 months, Orange said in a statement.

Should the branding agreement be terminated, Orange would rebrand its research and development operations in Israel under its own name.

"For Orange, Israel is a strategically important country and we have a long-term commitment to it, including our innovation activities through the Orange affiliates in Israel," Orange deputy CEO, Pierre Louette, said in the statement.

It said it had agreed to pay Partner 40 million euros ($44.7 million) while a market study is carried out on Partner's position and an additional 50 million could be paid out should the agreement be terminated within 24 months.

Reporting by Leigh Thomas; Additional reporting by Tova Cohen in Tel Aviv; Editing by Susan Fenton

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