As the mobile communications business becomes increasingly dependant on international markets, Mr Swantee was brought on board to manage the same kind of transformation across Orange’s 114 million subscriber base spanning 27 countries.

When he calls a leadership meeting, the faces around the table at Orange now hail from all corners of the globe – from the Dominican Republic to Moldova. Unlike the IT industry, mobile telecoms is a very local business which presents an enormous managerial challenge in finding global synergies while maintaining a local presence. He says: “To be successful you need to invest locally, have people on the ground and work the local regulations.”

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Orange is the sixth largest mobile operator in the world in terms of revenue, is France Telecom’s single brand for internet, television and mobile services, and includes Orange Business Services. Mr Swantee says that the company’s growth strategy is three-pronged: consolidation in existing markets; targeted partnerships and acquisitions to build the content and applications business from 6% of total revenues to 15% by 2010; and expansion into emerging markets.

Global expansion

Africa and the Middle East are two emerging markets that are key to Orange’s global expansion plans. In September, Orange launched a third-generation (3G) network in Egypt to provide data services. The company operates there under a joint venture with local partner Mobinil. The biggest hurdle in these markets is maintaining service levels in the face of such phenomenal growth, says Mr Swantee. “Last week in Egypt we had 18 million customers, this week we have 18.4 million.”

France Telecom is present in 13 African countries, mostly in French-speaking west Africa. However, in September, Orange Kenya was launched with the $390m acquisition of Telkom Kenya, becoming Kenya’s first fully integrated fixed-line, mobile and internet provider. The company has invested €58m ($81m) in Kenya’s network infrastructure this year, expecting to capitalise on the low mobile user rate of 30% and hoping to increase its customer base from 500,000 to 1.5 million within a year.

Africa is a key expansion focus for the company which has made inroads into Guinea Bissau and Niger. “What Telefonica is to South America, we are to Africa,” says Mr Swantee. Each new market has a different set of challenges, such as sporadic access to power in Africa, for which Orange is developing solar-based network capability. With new markets come new products for different market requirements. Voice- based SMS is a product specific to the Middle East where illiteracy is common – but is not offered in more mature markets.

Mature markets

Investments in emerging markets can bear fruit in mature markets. For instance, mobile banking is being developed in Africa, where people may have a phone but no bank account, only to be launched subsequently in mature markets. Orange typically tries to build relationships directly with governments and regulatory bodies, and capitalise on its strong links to French-speaking parts of the world, including Asia. The relationship includes former French colonies such as Vietnam, where the company has engineering resources in place for further development. Orange has no cultural links to India, and although it has a franchise business-services operation there, it has no consumer presence in the country because it has not obtained a mobile licence.

The company attracts more than 10 million new customers every year in Africa, the Caribbean and the Middle East but Mr Swantee perceives tremendous opportunity to penetrate emerging markets further. Unlike some mobile operators, which are dependent on emerging markets for their future growth, Orange is still seeing 10% growth in mature markets. “In mature markets we are focused on content to provide a broader portfolio of services, to capture a higher value segment of the market,” says Mr Swantee.

Africa and the Middle East are still fairly slow in adopting mobile data services whereas central and eastern Europe are seeing huge subscriber growth because an absence of legacy technology and weak fixed infrastructure has meant the market has jumped directly to the latest mobile technology. “These markets are very interested in quickly bridging the gap between themselves and Western markets in terms of available technology,” says Mr Swantee, who adds that Orange’s September launch of the iPhone in Poland and Romania had exactly the same take-up success as in western Europe.

World synergies

Finding global synergies extends to the firm’s R&D activities. Orange has 18 R&D laboratories around the world, managed as one global entity producing 500 patents a year, with the largest presence in France. The firm has also R&D laboratories in the emerging markets, where the main constraint is the short supply of relevant skills.

Mr Swantee is passionate about innovation and fears for European competitiveness in this area. Viviane Reding, the European telecoms commissioner, is spearheading European Commission proposals to impose price caps by 2012 on mobile network operators who charge customers connecting to other networks. “Ms Reding’s statements are only about pricing and not about creating a sustainable environment for companies to invest in R&D,” says Mr Swantee, who believes that many European telecoms companies are not investing as much as Orange’s 2% of total revenues in R&D. “European operators have always been quite strong because we had a strong regulatory framework to push innovation, such as the GSM [Global System for Mobile] standard,” he adds.

Sustainability problem

Sustainability must be part of the dialogue because it is one of the biggest problems the firm faces. “The amount of mobile data has a huge impact on our networks, the amount of sites we need, the amount of energy we need and the amount of cables we need in the ground,” says Mr Swantee. Orange spends more than €5.4bn on its networks. “If we can’t sustain that kind of investment, we are not preparing for the future so we need industrial policy and regulation to deal with it,” he says, giving the US IT industry as an example of winners and losers, where successful companies were the ones that kept investing in R&D.

“Less intervention in the current market mechanisms would be helpful – and more guidance and intervention around setting standards, such as GSM, for example, to spur innovation and sustainable R&D,” says Mr Swantee. “We don’t want to be a commodity, we want to be leaders in innovation and drive the whole market forward.”

COMPANY PROFILE:

ORANGE

Head office

Ile-de-France, Paris, France

Annual turnover

$78.65bn (2007)

Total mobile customers

113.8 million (June 2008)

Total broadband customers

12 million (June 2008)