France Télécom Expands Footprint With Orange Horizons
France Télécom -Orange has launched a new subsidiary calle d Orange Horizons to develop business projects in countries where the g roup does not yet provide mass market telecoms services. The projects will take advantage of the global reputation of the Orange brand and existing assets , to create new revenue streams and improve customer loyalty across its footprint with minimum investment and risk. BMI believes t his move is part of France Telecom 's overall emerging markets growth strategy , for which it has set an ambitious revenue target by 2015.
|France Telecom's MEA Revenue Growth (EURmn)|
According to a press statement by the group on January 16, the projects that will come under the Orange Horizons services include online stores, travel solutions, OTT services and, where possible, MVNO activity. There is a precedent for this business model among global telecoms service providers. Spain's Telefónica and South Korea's SK Telecom have launched digital services to expand their international footprint and create value for existing customers. We expect major operators to increasingly adopt this model to drive revenue growth, amid declining revenues from traditional voice services, and increase the capacity utilisation of their existing assets. One of the key assets France Telecom will look to fully utilise, is the Africa Coast Europe (ACE) submarine cable system, which launched on December 19 2012 and has the capacity to connect more than 20 countries in Africa ( see our online service, January 4 2013, ' ACE Boosts Broadband Capacity But Poor Last Mile Limits Potential ').
Although Orange Horizons is expected to have a global footprint, BMI expects a heavy focus on emerging markets, particularly the Middle East and Africa (MEA) where France Télécom has set an ambitious revenue target of EUR7bn by 2015. In 2011, France Télécom's MEA operations generated EUR3.746bn or 8.3% of total revenue. However, the group's performance in both regions in 9M12 suggests it is on track to hit EUR4bn in FY12. This is a significant step towards its medium-term target but still wide off the mark.
With three financial years left to achieve its goal, Orange Horizons appears to be a viable strategy for France Télécom to boost revenue growth in the region by extending its services to key countries it is not already present in as a mass-market service provider. It is, therefore, not surprising that the operator launched the service in South Africa and to coincide with the Orange Africa Cup of Nations, for which it is the primary sponsor. France Télécom has launched Orange branded e-commerce and infotainment sites in the country as a first step in the Orange Horizons initiative. Other key markets in Africa we expect Orange Horizons to expand into include Angola, Nigeria, Ghana, Tanzania, Zambia and Zimbabwe. ACE is extending connections to Angola, Ghana, Nigeria and South Africa, and we expect these links to support Orange Horizons services in those countries.
BMI believes Orange Horizons will benefit from the partnerships that France has established with content providers in recent years. These include Baidu, Google, Facebook and Wikipedia. Meanwhile, we expect the operator's OTT entertainment platforms, Deezer Music and Daily Motion, to be key parts of its OTT services. Over the long term, we expect Orange Horizons to precede the expansion of France Télécom's hugely successful B2B subsidiary, Orange Business Services (OBS), into Africa. OBS provides high-end corporate solutions, including cloud computing, machine-to-machine (M2M), enterprise mobile management and video solutions in bigger markets. However, we believe the operator is looking closely at emerging opportunities in Africa on the back of increasing investments in advanced telecoms infrastructure and a positive economic growth outlook over the medium term.
|Source: BMI, France Télécom|
|e-commerce sites||Sell wireless devices, accessories and other electronic equipment. These could also serve as assistance corners for Orange customers visiting from abroad|
|OTT||Launch over-the-top country websites to leverage existing assets such the group's pan-continental web-portals StarAfrica (Africa) and StarMedia (LatAm), and content providers Deezer and DailyMotion|
|Travel Solutions||Launch multi-country travel solutions, using Wi-Fi or VoIP technologies, for professionals and tourists visiting from countries in which Orange is already present|
|MVNO||Launch MVNO services in countries where opportunities arise|