Orange joins anti-Voda alliance
Talking the Talk
Today is Strategy Day for Orange, with the France Telecom-owned mobile operator telling the world its plans to make money.
Some of the ideas have been trailed already in last Sunday's papers - we already knew that Orange was joining T-Mobile, Telefonica Moviles and TIM in an alliance. This will deliver an "enhanced customer experience through seamless voice, data and mobile internet services across multiple markets". In other words, Europe's mobile network operators are ganging up against Vodafone, the only firm that is capable of supplying a seamless service across Western Europe (bar France) on its own.
Orange has some work to get seamless internally. The company today said it will implement a common technology platform across the group, adding "intelligence to the network infrastructure to deliver new services and applications quickly and consistently to its customers". And of course there are cost savings to be made. We are surprised the company hasn't done this already.
Customers. Who needs 'em?
But what is this intelligence for? Apparently it will enable Orange to offer more personalised services for which it can charge more money. The company is making great play of a new customer segmentations strategy which will see the company attempt to deliver services according to lifestyles and interests, as opposed to the traditional carve-up by age, sex, income demography.
Orange of course has a new CEO, Sol Trujillo, and he has a lot to say about this:
"We plan to talk much more to the customer, find out what their communication needs are, what applications they want, how they want to be served and how they want to communicate with us. For example, some will want single point access, from fixed line, Internet and mobile communication services, others may simply require mobile applications. To achieve the ability to get much closer to the customer, and collect data about the customer, we intend to create new IT systems and optimise its existing systems to enable it to use this data in a meaningful and rapid way. We believe that this focus on the needs of the individual will prove beneficial both for the customer and the business, engendering customer loyalty, building trust and, in turn, driving revenues."
Show Me the Money
Trujillo is setting is stamp on the company by centralising many functions under a new management A-Team. The company is to concentrate its focus on the Eurozone countries (including the new Eastern European entrants to the EC). This suggests a reining in of global ambitions - Orange is, for example, an active player in sub-Saharan Africa.
But considering the indebtedness of France Telecom, this is hardly surprising. Last year Orange saw its capex slashed by its parent company. This year it expects to see it rise by $2.3bn. But the emphasis is very much on driving investment from operational income rather than borrowing.
Orange aims to be EBITDA positive in 2003 and to move into operating free cash flow positive status in 2004. It says it is on track to grow revenues 5 per cent in 2003, and it forecasts accelerating growth in 2004 and 2005. The company says it will have cumulative operating free cash flows of approximately 14bn Euros from 2003 to 2005.
By 2005, Orange wants to "have a footprint where we are number 1 or number 2 in each country or have a value share in excess of 20%". This suggests to us that it will withdraw from countries which fail to make the grade. ®