Orange hints it might be ready to take Romanian fixed assets off DT

Last week, reports emerged Deutsche Telekom had been given the green-light to sell its fixed network stake to Orange in Romania, and the French telco isn’t quashing the rumour.

With a 54% stake in Telekom Romania Communications, DT has a healthy position in the market, though it appears the country is no-longer part of the grand plan. Orange is reportedly in-line to purchase the fixed network stake, the remaining 46% is owned by the Romanian Government, and as you can see from the statement below, it is not denying the rumours.

“The Orange Group’s strategic ambition is to be a leading convergent fixed and mobile operator in Europe, and we are exploring all potential opportunities in Romania to further implement this strategy,” the company stated.

“Our analysis is still at a preliminary stage and no decision has been taken by Orange. In any case, such a decision would be subject to mandatory regulatory approvals.”

The reports in local press claim DT has received approval from the Romanian Government to sell its stake in one of the country’s biggest telcos. For Orange, this does look like it is a sensible move. It is the leading mobile provider in the country, though adding the fixed assets through such an acquisition would certainly make a more complete offering.

The convergence business model is one which is being firmly grasped across the Orange group. There are of course regional twists in terms of execution, though the over-arching strategy is fully-embracing convergence.

What is worth bearing mind is that there is enough nuanced language to add an element of doubt, but it does appear an announcement of some kind might be on the horizon in the not too distant future.

Coopetition is becoming permanent fixture of 5G world

It might be a management consultant phrase, enough to have some clawing their eyes out, but coopetition is quickly becoming the norm as telcos drive towards the elusive goal of ROI.

The latest firms to enter into the new-era relationship are Orange and Proximus. Announced this week, the duo has signed a term-sheet to enter into a mobile access network sharing agreement by the end of the year. The scope of the partnership will be to meet raising demands in terms of mobile network quality and indoor coverage.

“The signing of the term sheet is an important step in reaching a final mobile access network sharing agreement between Proximus and Orange Belgium,” said Dominique Leroy, CEO of Proximus. “It will allow us to embark on a faster and broader 5G roll-out while improving mobile network capacity and coverage to the benefit of our customers and while keeping a strong and differentiated customer experience.”

“Mobile access network sharing is a trend in Europe which benefits consumers, as it enables more efficient investments to cope with the increasing data consumption,” said Michaël Trabbia, CEO of Orange Belgium. “The timing of this mobile access network sharing agreement is important as it will allow us to accelerate 5G roll-out, while bringing significant environmental benefits by reducing the combined energy consumption by 20%.”

This is a very simple partnership ultimately. The two telcos will enter into a shared infrastructure agreement, it seems both passive and active infrastructure is included but will rely on their own spectrum to differentiate on customer experience. This does appear to be an increasingly common strategy across the European continent to drive the commercial appeal of the connectivity business.

Another example of such business is in the UK, where the telcos have paired off to create joint-ventures to own and manage passive infrastructure in certain regions. CTIL and MBNL are the JVs in question and allow the four MNOs to share the expensive job of civil engineering but differentiate their offerings on the active equipment being installed on the masts and spectrum assets.

One of the reasons such partnerships are becoming more common across Europe is scale. With more than 100 different telcos across the continent, the telcos cannot achieve the same subscriber bases as counterparts in the likes of the US and China. This impacts procurement strategies as well as the ability to drive ROI in the mid-term.

Bearing this in mind, densification and network rollout into the rural communities becomes a problem. 5G is eventually going to force the telcos to acquire more mobile sites in the urban areas, to deal with the traffic increases but also to compensate for shorter spectrum ranges on higher-frequency bands. The rural environments are of course less commercially attractive due to the lower population density, but there are both commercial and regulatory demands to prevent a digital divide.

“The deal between Orange and Proximus is just the latest in a series of network partnerships designed to keep a lid on costs and accelerate deployment,” said Kester Mann of CCS Insight. “This is particularly important at the start of the new 5G era as operators continue to scratch their heads over the business case for investment.

“Although the approach could limit opportunities for operators to differentiate based on connectivity, it could free up investment in other areas such as content, vertical markets and new services. This can only be to the benefit of the consumer.

“We should expect further industry collaboration going forward. This could include the possibility of more innovative models such as shared networks between all operators in a single market or ownership of assets such as spectrum and infrastructure by independent third parties or even government.”

Another recent example of this type of coopetition is in Japan. Last week, KDDI and Softbank came to an agreement to share infrastructure in rural environments. This initiative is also geared towards reducing the burden of capital expenditure in delivering 5G to every corner of society. TIM and Vodafone Italia are another duo exploring the coopetition play to tackle the issue of rural 5G connectivity.

Elsewhere in the telco world, coopetition is emerging in the services game.

There are numerous examples of telcos buddying-up, for most cases with telcos outside of their commercial jurisdiction, to jointly develop services for 5G epoch. As it stands, 5G is nothing more than a ‘bigger, badder, faster’ version of 4G, though if the financial promises are to be realised differentiation is needed. For most, this means venturing into the murky world of enterprise services.

Last month, SK Telecom and Deutsche Telekom announced a partnership which would develop various technologies to improve indoor coverage and explore low-latency media services. A long-standing partnership between DT and Orange has led to the emergence of Djingo, a smart-assistant to challenge the dominance of the OTTs in the smart home.

Coopetition might sound like a buzzword fit for boardrooms of coffee drinkers and overpaid management consultants, but it is a trend which is slowly emerging in the telco world. And in some cases, it might just be the perfect solution to drive towards the long-overdue profits.

Orange CEO cleared of fraud

The interminable Tapie saga, which threatened to topple Orange CEO Stéphane Richard, has finally concluded with everyone acquitted of wrongdoing.

Richard (pictured) was accused of complicity in a fraud that involved the French state handing over €404 million to French businessman Bernard Tapie back in 2008. At that time Richard was Chief of Staff for Finance Minister Christine Lagarde, who was eventually found guilty of negligence in creating the circumstances for the payout and then not challenging it.

Part of Lagarde’s defence when she was put on trial back in 2016 was that she didn’t really know what she was doing because Richard didn’t furnish her with sufficient information. This led to the current trial, which investigated the role Richard and a few others played in the whole affair.

The reason for the payout was a claim from Tapie that he got ripped off when he sold his stake sportsware company Adidas to Credit Lyonnais, which is partly state-owned, in order to avoid a conflict of interest when he became a government minister back in 1992. The bank subsequently sold on the stake at a profit, leading Tapie to allege that it had deliberately undervalued it previously.

Tapie sued Credit Lyonnais and eventually Lagarde pushed the case to a closed arbitration panel which made the €404 million award. Not only was the matter deemed to be badly handled by Lagarde and her team, but the award was eventually reversed amid suspicions of fraud. This case seems to reverse that decision once more, so it looks like Tapie will get to keep the cash after all.

This is obviously good news for Orange, which had no involvement in any of it but has had Richard at the helm for eight years, during which he seems to have done a decent job. The whole thing still stinks of an establishment stitch-up, however, with French taxpayers handing over an enormous amount of cash to a rich former politician to compensate him for a botched business deal.  Richard will obviously be relieved too, but s Lagarde’s recent appointment to head the ECB indicates, he may have escaped any negative consequences even if he had been found guilty.

Orange gears up for the Tour de France but no mention of 5G

This weekend will see the Tour de France begin in Belgium and while it might be a chance for some to enjoy a tipple in the sun, for Orange it is a monstrous task. But it does seem to have forgotten to plug 5G.

Delivering a connectivity solution for this spectacle is somewhat of a difficult task. The race covers 3,460km over 21 stages, starting in Brussels, winding through 219 municipalities in France before ending in Paris. Four stages will be held in the Pyrenees and another four in the Alps, while numerous see the race snake through rural France. These are not necessarily the easiest environments to provide connectivity in.

The other factor you have to take into account is this is not necessarily a ‘build once’ concept for network infrastructure; the tour route changes every year, making permanent infrastructure redundant in numerous areas. That said, it does provide the commercial drive to bridge the digital divide in some rural environments.

In some places, it makes just as much commercial sense to rollout permanent infrastructure to the small towns as it does to make it temporary in the more secluded areas. This year, 11 locations will benefit from a permanent fibre installation, while 37 municipalities visited by the Tour and 182 municipalities located within 10km of race will also benefit from 4G upgrades.

This is not to say Orange should wait for the Tour de France to pass through a village to address the digital divide, but it is a nice by-product for some communities.

One massive omission from any of the materials is 5G. With 5G buzzing in almost every corner of the connectivity world, it would be a fair assumption it would be here as well. In other sponsorship properties Orange owns, Roland Garros for example, 5G has been the focal point of communications, but it has been missed out here.

Admittedly, this is a different and more complicated environment to deliver the super-fast ‘G’, but it does seem to an oversight; there are various different usecases which could be plugged by the telco here. This is not to say Orange should wait for the Tour de France to pass through a village to address the digital divide, but it is a nice by-product for some communities.

In 2017, we had a behind-the-scenes tour of the event, with Orange offering some insight into the efforts made to deliver connectivity. And its not as easy as it sounds. Alongside the Orange technical team which has to move with every stage of the tour, the telco has to provide connectivity for roughly 120 trucks housing various broadcasters, shifting 20km of fibre and 65km of power cables each day.

The figures quoted above were accurate two years ago, now you have to take into account consumers are more digitally defined, using a broader range of apps and digesting more data on a daily basis. Here’s a bit of a taste of the complications Orange faces this year:

  • 7,000 hours broadcast by 190 countries worldwide
  • 10 to 12 million spectators on the roadside
  • 8 million unique visitors to the website
  • 32 km of cables deployed at the finish line during the event
  • 350 temporary phone lines
  • 32 mobile 3G/4G mobile relays to strengthen mobile network coverage
  • 250 km of specifically deployed optical cables

In the ‘village’ at each stage of the Tour, Orange has said it will deploy eight separate wifi networks, with an equivalent rate of 200 Mbps and able to handle more than 10,000 simultaneous connections. This is the easy part, the village doesn’t move all day, but providing continuous connectivity while the race is progressing is a different challenge.

This is a marketing opportunity for Orange, it gets to show how wonderful it is at solving complicated problems, but there is certainly an upside for some in the rural communities who could see a connectivity boost. Assuming the race passes through your quaint village of course.

KaiOS gains Orange support in African drive

Orange has come out in support of KaiOS Technologies, as the telco contributed to the $50 million raised in total during its Series B funding round led by Cathay Innovation.

The cash itself will be used to fuel expansion of the feature phone operating system into new markets, introducing new features and further expanding the KaiOS developer community. To date, there are currently more than 100 million devices running on KaiOS, with a footprint in 100 countries.

“Our mission is to open up new possibilities for individuals, organizations, and society by bringing mobile connectivity to the billions of people without internet in emerging markets, as well as providing those in established markets with an alternative to smartphones,” said Sebastien Codeville, CEO of KaiOS Technologies.

Aside from fuelling an alternative to Google’s Android OS, the partnership between is also geared towards improving accessibility from a device perspective.

“Today the two main barriers to internet access are the lack of infrastructure, for which Orange is investing one billion euros per year, and the cost of the device,” said Alioune Ndiaye, CEO Orange Middle East & Africa.

“As part of our effort to overcome this second barrier, I am very pleased to have this opportunity to develop our partnership with Kai through a direct investment. Providing our customers with access to affordable devices is a crucial step in our ambition to democratise access to the Internet in Africa.”

During Mobile World Congress this year, Kai and Orange launched Sanza, a smart feature phone which incorporated voice-recognition, extended battery life and popular apps as the main features. However, most importantly, the device is sold for as little as $20.

As Ndiaye points out above, accessibility in terms of infrastructure and devices is an issue across the African continent fuelling the ever-expanding digital divide. Africa is a profitable region for Orange, but to grow these profits the telco will have to ensure the internet is accessible to the millions of people who aren’t surfing the digital highways today.

AT&T, KPN, Orange and Swisscom enable LTE-M roaming across their networks

A consortium on European operators has got together with AT&T to activate LTE-M roaming across North America and Europe.

LTE-M is a low power wireless technology that’s not as low-power as NB-IoT and Lora, but is better than nothing and based on existing tech. Thus it’s a handy first step into IoT for applications that don’t have minimal power consumption as a priority, but it’s still not much good unless the LTE-M modules are free to roam globally.

This is a good step in the right direction as now, if you get some kind of IoT package from one of the operators involved, you can now roam to the US, Mexico, France, Holland and Switzerland to your heart’s content. What you will do if your IoT module happens to find itself anywhere else, however, remains a mystery.

“More and more of our enterprise customers require global capabilities as they deploy IoT devices and applications,” said John Wojewoda, AVP, Global Connections Management, AT&T. “These LTE-M roaming agreements help meet that demand and make it easier for businesses around the world to benefit from the power of a globalized IoT.”

“The introduction of LTE-M creates many new possibilities for our partners, customers and prospects,” said Carolien Nijhuis, Director IoT at KPN. “Roaming with LTE-M has been one of the most requested features by our customers in the market. We are very happy we’re now able to fulfill their needs and unlock their international IoT-potential.”

“Enabling access to roaming on LTE-M for our customers is a clear priority for Orange,”” said Didier Lelièvre, Director mobile wholesale & interconnection, Orange. “We’re proud to be among the first operators to deliver such a roaming capability to our IoT customers and more widely to our partners across this market.”

“After offering the first nationwide LTE-M and NB-IoT networks in Switzerland, we are happy to prove our strong position on roaming and be among the first operators that enhance the key technology LTE-M for 2G replacement with international roaming,” said Julian Dömer, Head of IoT at Swisscom.

Orange drops €515 million on yet another cybersecurity acquisition

French telecoms group Orange is buying Dutch cybersecurity services outfit SecureLink as it looks to become a major security player.

Orange’s security division already brings in around €300 million a year and this acquisition will almost double that. It comes just a few months after Orange spent an undisclosed amount to buy Securedata, which put €50 million more revenue into the pot, so probably cost in the region of €100 million.

SecureLink seems to be more about cybersecurity services and consulting than the actual software, but that includes a fair bit of value-added reseller work. It employs 660 people and has 2,100 customers. The total headcount for the whole of Orange’s cybersecurity division will be around 1,800 so this is a pretty major boost.

“Cybersecurity is a growing priority for companies of all sizes, and we believe the two most important success factors are Scale and Proximity,” said Hugues Foulon, Executive Director of Cybersecurity at Orange. “Scale because today’s threats are global, complex, and require matching protection capabilities. Proximity because in the global IT world, you want a trusted local partner to secure your most strategic assets.

“With the acquisition of SecureData and SecureLink, Orange has the highest scale to anticipate and fend off attacks, as well as local defense teams in all the main European markets, positioning the combined organisation as the go-to defense specialist. I am looking forward to building the integrated organisation with Michel Van Den Berghe, CEO of Orange Cyberdefense, Thomas Fetten and all the teams”.

“We have been very impressed by the ambition and successful development of Orange Cyberdefense over the past few years, and are very excited to build a pan-European leader of cybersecurity together,” said Thomas Fetten, CEO at SecureLink. “Orange Cyberdefense, SecureData and SecureLink are highly complementary and share a common vision for the sector, and the combined organisation will be in a phenomenal position to address the needs of our customers, partners and employees.”

A weak France overshadowed Orange’s Q1

The telecom operator Orange reported a flat Q1, with a weak performance in its home market partially compensated by the strength in Africa and the Middle East.

Orange reported a set of stable top line numbers in its first quarter results. On Group level, the total revenue of €10.185 billion was largely flat from a year ago (-0.1%), and the EBITDAaL (earnings before interest, tax, depreciation and amortisation after lease) improved by 0.7% to reach €2.583. Due to the 8% increase in eCAPEX (“economic” CAPEX), the total operating cash flow decline by 10.2% to €951 million.

Orange 2019Q1 Group level numbers.pdf

Commenting on the results, Stéphane Richard, Chairman and CEO of the Orange Group, said that “the Group succeeded in maintaining its high quality commercial performance in spite of a particularly challenging competitive context notably in our two principal countries of France and Spain. Our strategy is paying off since EBITDAal is continuing to grow while revenues remain stable, allo wing us to reaffirm our 2019 objectives”

On geography level, France, its home and biggest market is going through a weak period. Despite registering net gain in the number of customers, the total income dropped by 1.8% to €4.408 billion, the first quarterly decline in two years. The company blamed competition, a one-off promotion of digital reading offer towards the end of the quarter, and “a weaker performance on high-end equipment sales in the 1st quarter of this year”. The move to “Convergence” was positive, but not fast enough to offset the lose in narrowband customers. The competition pressure is still visible. The Sosh package (home broadband + mobile) Orange rolled out to combat Free is gaining weight among its broadband customers, which resulted in a decline of revenues despite the growth in customer base.

Orange’s European markets, including Spain and the rest of Europe, reported modest growth, with strength in Poland (+2.6%) and Belgium & Luxembourg (+3.8%) offset by a weaker Central Europe (-1.9%). The bright spot was Africa and Middle East, which registered a 5.3% growth to reach €1.349 billion revenue, taking the market’s total revenue above Spain and just marginally behind the rest of Europe. The company’s drive to extend its 4G coverage in Africa is paying off, with mobile data service contributing to 2/3 of its mobile growth. Orange Money also saw strong enthusiasm, with the revenue up by 29% and total number of monthly active users totalling 15.5 million.

Both the Q1 results and outlook to the rest of the year spelled mixed messages for the wider telecom market and Orange’s suppliers, but negatives look to outweigh positives. On the consumer market side, the slowdown of high-end smartphone sales and prolonged replacement cycle has once again been demonstrated in the weak numbers in France. On the network market side, Orange predicts more efficiency. This includes both the network sharing deal signed with Vodafone Spain, which is expected to deliver €800 million savings over ten years, and an overall reduction in CAPEX this year.

As the CEO said, “while the level of eCapex for this quarter is higher, it should reduce slightly for 2019 as a whole, as predicted, excluding the effect of the network sharing agreement with Vodafone in Spain announced on 25 April.” This means, to achieve the annual target of reduced CAPEX, the spending will drop much faster in the rest of year. There is no timetable to start 5G auction in France yet, but it will be safe to say that any expectations of 5G spending extravaganza will be misplaced.

On the positive side, Orange has seen its efforts to diversify its business gaining traction, especially in IoT and smart homes. But these areas, fast as the growth may be, only make a small portion of Orange’s total business.