Preamble
Orange is perhaps the global carrier with operations in the most diverse geographies and cultures. From its headquarters in Paris, Orange (formerly France Telecom) now serves 265.162,000 subscribers worldwide with mobile, broadband, fixed telephony, TV and a range of advanced enterprise services. Part 1 covered the company’s recent performance indicators, this part will cover two growth segments for Orange: Africa and mobile money.
Ambitions for Africa
Orange currently is the No.1 or No.2 mobile network by market share in 21 countries across Africa and the Middle East, where it has more than 120 million customers. As of last August, Orange had launched 4G in 9 of these countries, with network upgrades planned or underway in all of these markets. The stated ambition is for Orange revenue in Africa and the Middle East to grow 20% over the 2015 to 2018 time frame. For 2016, Orange reported Euro 5.2 billion in revenue from Africa and Middle East (12% of the group total). The company views this region as a strategic priority given the young and growing population, as well as the lower mobile penetration and broadband adoption rates compared with developed markets in Europe.
One obstacle to overcome in the region is the lack of financial services for large segments of the population. For the past few years, Orange is striving to develop a mobile money service that could turn this situation into a strategic differentiator for its mobile networks. Orange Money is its flagship capability for money transfers and mobile financial services, currently available in 17 countries and with more than 31 million customers. To manage risk associated with its electronic money operations, Orange has set up a dedicated organization, CECOM, based in Abidjan, Côte d’Ivoire. CECOM reports to the Orange Group and provides second-level control for the Orange Money business, which exceeded one billion Euros of transactions in June 2016.
For many subscribers, Orange Money is their first experience with an electronic bank but, over time, Orange Money is moving beyond basic banking. Earlier this year, Orange Money announced a partnership with Vivo Energy that enables customers to cash in and cash out money from their Orange Money account and pay in any of the 1,000+ Shell service stations operated by Vivo Energy. The services are already available in Mali, Cote d’Ivoire and Madagascar. Orange Money expects to have this operational across the rest of its common footprint by mid-2017.
The latest project in Africa is the expansion of the Orange brand in May 2017 to Liberia, where the former Cellcom Liberia has just become Orange Liberia. This was accomplished via acquisition of the Liberian operator Cellcom by Orange Côte d’Ivoire. Cellcom Liberia, founded in 2004, claimed over 1.6 million customers at the end of February 2017. The Republic of Liberia, which has a population of about 4.5 million, has a relatively low mobile penetration rate of 70%. Cellcom Liberia launched its 4G LTE network last year, with the construction of 29 sites. Now that it has taken over operations, Orange plans to accelerate the 4G network upgrade across the country, including in areas that are still awaiting basic telecom services. Approximately three-quarters of the population resides outside of the capital city of Monrovia.
Previously, in 2016 Orange acquired the second largest mobile operator in Burkina Faso from Airtel. Burkina Faso, with a population of approximately 18 million, has one of the strongest growth rates (5.8%) in the Economic Community of West African States, and a mobile penetration rate of about 80% as of last year. The deal with Airtel brought 4.6 million customers.
Also in 2016, the Orange brand replaced the Méditel brand in Morocco. Orange’s Moroccan subsidiary had 14.2 million customers at the end of September 2016, the second largest total within the group’s Middle East and African footprint, after Orange Egypt, and contributing close to 10% of its revenue in this region. The group's interest in Morocco goes back to 2010, when France Telecom invested Euro 640 million to acquire a 40% stake in Méditel. The Méditel network includes more than 5,400 km of optical fibre and more than 4,000 radio sites throughout the kingdom.
However, despite the many new markets and growing subscriber counts, the volatility of political and economic conditions in Africa always remains a worry. Over the past year, Orange said it was impacted by difficult conditions in Egypt and the Democratic Republic of the Congo (DRC).
Orange Brings mobile banking from Africa to Europe
Interestingly, several years after launching its Orange mobile banking service in African markets, Orange is now ready to bring it to Europe. In October 2014, Orange Finanse was introduced in Poland in partnership with mBank, the fourth largest retail bank. The company says Poland is where NFC (near field communication) has developed most fully in Europe, with 80% of payment terminals already equipped for contactless payments and more than 3 million users routinely using mobile payment services (Poland has a population of about 38 million).
Starting in July, Orange is launching a mobile bank for its home market of France. Launch materials distributed to the press state this new business is organised as Orange Bank SA, with capital of Euro 297,575,712 and a commercial relationship with Visa. In addition to standard banking services, Orange will provide money transfers via SMS, as well as a virtual assistant driven by artificial intelligence. Ultimately, Orange Bank aims to have more than 2 million customers in France, where it currently has around 30 million mobile users. Orange's ambition is to reach Euro 400 million in revenue in 2018 in the financial services field across all markets.
Stéphane Richard, chairman and CEO of Orange has commented that the commercial launch of Orange Bank for the general public in July marks an important new chapter in the group's history, with Orange also a bank that places customer experience at the heart of its business model. He added that Orange Bank will build on the professional skills of its banking experts, the disruptive capability of its partnerships with start-ups and the traditional assets of Orange: its distribution network, its expertise in digital services and financial strength. By bringing together these different sources of energy, it aims to meet the expectations of customers in a way that will enable it to adapt as their needs evolve.
In specifying the new VTNS IA, OIF aims to identify the requirements and characteristics of different virtual network service types, such as dynamic and static behaviours. The new IA is also intended to define the attributes and parameters required for these service types and the requirements for support of service recovery and OAM.
