Telecoms, a market in consolidation

Telecoms, a market in consolidation
By Euronews
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Telecoms seems to have a guaranteed future ahead of it, an essential cornerstone 21st century industry employing hundreds of thousands, yet it is an industry in flux in Europe, one of its most competitive markets, where a host of household names jostle for position and some grand old industrial empires and upstart brands square off to grab sales. The prizes are huge, and the game is on.

French number one mobile operator Orange intends to be still standing when the dust settles. Today it is a 41-billion-euro-revenue company with 164,000 employees
and 240 million customers worldwide. CEO Stéphane Richard insists innovation and market consolidation are the key future trends.

Giovanni Magi, euronews:
“Orange has introduced some new devices, applications and software. Is innovation playing a major role in the growth of companies like Orange?”

Stéphane Richard, CEO, Orange:
“Yes, innovation is a key to growth and to differentiation in the market. Because, in the telecoms market, first we’re in the core of this digital revolution and we’ve a great contribution to bring to this, for instance in the Internet of things, or in the cloud-based services, in mobile banking; but in the same we are in an industry where there is a trend to, in fact, put only prices as the criterion of choice for consumers. And we want really to bring new services and new innovations to our customers to make them even happier about Orange.”

euronews: “So, it is also a factor of competition between telecoms?”

Stéphane Richard:
“Definitely, I do think that it’s a factor of success in the competition. In fact, there are 2 main factors: the quality of the networks, which is still a basic and that is why we invest a lot in our networks, fixed and 4G wireless, and innovation in services, in the user interface and in the customer relationship in order to be really perceived as a difference, a different player, a different partner, who is competitive in terms of prices but who brings clearly a lot more.”

euronews: “The French telecoms market is in turmoil, like other markets in Europe and elsewhere. You said that 4 players is too many and the French market needs a consolidation. Does that mean that less competition is better?”

Stéphane Richard:
“It’s not a matter of less competition or more competition. The point is that we are in an industry where there’s a huge need for investments, because we have to make the country connected. With fiber, with 4G, so a lot of investments. And that you have always to strike a balance between competition, based on prices and investments.

I do think that the size of the French market, (I keep thinking this), is not enough to really sustain 4 players, 4 all-role players. By the way, Germany has recently decided to switch from 4 to 3. In the US market, which is in itself the size of the whole European Union, you have 4 operators; you have only 3 in China. So, just explain to me why 3 operators in China is enough and what we would need 4 in France. It doesn’t make sense.

So, the point is that I do think that in France, like in other countries in Europe, the regulators have gone too far in trying to increase the number of players in the market and now we’re really in a cycle of consolidation.”

euronews: “Anyway, it seems that consolidation is going on in the networks. SFR and Boygues Telecom are willing to share their networks. Why Orange is opposing this move?”

Stéphane Richard:
“We’re not opposing network sharing in itself. And by the way, as you know, we’re operating in more than 30 countries and we’ve one third of our antennas that are within network-sharing agreements. So, we are practicing very much network sharing in Spain, in Romania, in a lot of African countries.

The point is that we’re in front of an agreement, in France, we’re not opposing this in itself but we’re vigilant about the conditions in which this network-sharing could be put in place, especially regarding 4G access, which is a sensitive issue, and that’s it. But I have nothing against network sharing.

Of course Orange is not in the best position to enter into network-sharing agreements because we’re the leader and because we’ve by far the best network. So, we’re not very willing to share it. This being said, these kinds of agreements are not easy to implement and, by the way, I think that SFR and Bouygues are experiencing that it is not easy and it can also raise some regulatory issues. So, it’s absolutely normal, we’re just defending our interest to pay a lot of attention to the regulatory environment of network-sharing.”

euronews: “You have launched a friendly takeover bid for the Spanish telephone operator JazzTel. Does that mean that Orange has a strategy of leadership in Europe?”

Stéphane Richard:
“Yes, clearly what we want to be is number one or number two in the markets where we are. Today in Europe you have to be convergent if you want to become leader and we thought that in Spain it would be very exciting and very strategic for us to combine with JazzTel, that is a very successful company.

Now we’re going to combine the 2 success stories of the Spanish market: Orange in the mobile and JazzTel in the fixed. So, we’re going to create a fantastic company made of those 2 skills and we will clearly have a very attractive position in the Spanish market with a capacity also to invest heavily in fiber to the home, since the target is to have 10 million home connected by 2017. So, it’s tomorrow.”

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