AFCON sponsor Orange sees Africa as a key growth opportunity

France Telecom’s brand Orange currently operates telecommunications services in 18 African countries. Africa and the Middle East make up around 36% of their 227 million customers worldwide. Football fans will also have noticed that the company is one of the main sponsors of this year’s Africa Cup of Nations (AFCON).

Sébastien Crozier

Sébastien Crozier, managing director of Orange Horizons.

According to Sébastien Crozier – managing director of Orange Horizons, a division of Orange that aims to seek out new business opportunities in countries where the Group is not already present – the company has further expansion plans across the African continent. How we made it in Africa decided to find out more.

How important is the African market to France Telecom and its brand, Orange?

Africa represents key growth opportunities for our Group.

Many countries still have below average mobile penetration rates (for example: DRC, Cameroon, Madagascar, Niger, Central African Republic and Guinea Conakry), which means that there is strong growth potential just in terms of offering basic communications services (voice and SMS). In addition to providing innovative offers adapted to local needs, Orange is also focusing on extending its networks beyond the major cities and into rural areas. The use of solar-powered base stations and village phones (a local entrepreneur runs a phone service on the back on an extended-coverage mast) are examples of how Orange is addressing these needs.

Mobile broadband is still underdeveloped and represents massive growth potential in the years to come in countries where penetration is higher. Orange now offers a 3G+ network in 15 countries in Africa and Middle East and 4G has already been deployed in Mauritius and a trial is starting in Botswana. Orange plans to have rolled out 3G+ networks in all countries by 2015. In order to boost connectivity and high-speed internet, Orange also invests in submarine cables like ACE (African Coast to Europe), which was just inaugurated in December 2012. Developing relevant offers to encourage the development of data usage will be a major objective in the immediate future. Offers such as the Flybox (similar to an ADSL box but using the 3G network) and Facebook for all (including SMS and USSD) have already become popular in many countries. Orange also just launched a new portal with Baidu, customised for Africa and Middle East.

Less than half the population in sub-Saharan Africa has a bank account. Services such as Orange Money – our mobile payment solution that allows cash transfer, bill-payment, international top-up – offer an incredibly powerful tool for improving customer loyalty, increasing revenues and, most importantly, providing a service that improves people’s lives.

Tell us a bit about Orange’s expansion plans in Benin, Togo, Burkina Faso and Mauritania. What makes these markets so attractive?

These markets make sense for France Telecom-Orange because of their proximity to other countries where Orange already operates (Côte d’Ivoire, Mali, Niger, Senegal, Guinea). If Orange was also present in these countries, it would allow the group to create regional “clusters”. We would consider any opportunity to move into these markets as a network operator, but within the bounds of our prudent and highly-selective M&A policy. We would look into any opportunity that would allow us to enter these markets at a reasonable price and in reasonable conditions.

Which African markets are the most profitable for France Telecom’s Orange?

We don’t provide figures on individual markets, but in any case every market has its own particularities and it is difficult to tell which one is the most “profitable”. We can say that Egypt, for example, is the Group’s biggest asset in terms of customer base with over 32 million mobile customers (compared to 27 million in France).

We can also mention that the positive revenue trend of +4.3% in Q3 2012 was mainly driven by Côte d’Ivoire (+19.7%), which contributed to half of our emerging markets revenue growth. Other good performances included Senegal and Mauritius.

South Africa is already quite a mature market in terms of mobile telecommunications. Do you think there are still opportunities that exist for companies wanting to enter the country?

The South African market is already well developed and there is little potential for significant growth. At present we have no intention of entering South Africa’s telecommunications market as a mobile network operator. The objective of Orange Horizons is to seek out new business opportunities outside of its operator footprint. This means launching services that require very little fixed capital expenditure that leverage the Group’s existing assets (content, purchasing power, the brand).

There have been reports that Orange is looking into launching a mobile virtual network operator (MVNO) in South Africa. Tell us about this.

A MVNO is a company that offers mobile phone services on the retail market without possessing its own network. To do this it must buy wholesale access to another operator’s network, and in many countries it must also possess a licence. In some cases, following extensive market analysis, Orange Horizons could open an MVNO activity. We have submitted a bid to acquire an MVNO licence in Togo for example. In South Africa, we have launched two websites, including one e-commerce website, and the launch of MVNO activities is not on the agenda at present. However, as has been said, we are open to opportunities.