It has been a busy week for France’s Orange, which, in addition to presenting its new strategic five-year plan to the world, found itself at the centre of consolidation talk in various markets.
"I confirm the non-existence of any possible discussions…with the managers and shareholders of Telecom Italia," Orange CEO Stephane Richard stated categorically at the telco’s Essentials 2020 event in Paris on Tuesday.
Richard was responding to recent rumours of a tie-up between the two incumbents.
"[There are] possible projects here and there, but nothing more," he insisted, adding that he has "no interest" in cross-border consolidation.
But in-m arket deals are not off the table for the French incumbent.
"We could consider some consolidation deals," said Orange CFO Ramon Fernandez, referring in particular to the telco’s operations in the Middle East and Africa.
In addition, "we could step out of some countries," he said, reminding the audience that the telco pulled out of Uganda in November, selling its local unit to Africell.
Orange’s Uganda exit was motivated by one of the main focus areas of its last major strategic plan, Conquests 2015. Under the plan, Richard pledged to carry out regular strategic reviews of Orange’s operating subsidiaries and consider selling those that stood no realistic chance of becoming a top two player in its market.
As well as Uganda, the company sold out of Switzerland, Austria, and the Dominican Republic, and came close to exiting Kenya. It is also on the verge of leaving the U.K. after finalising a deal to sell its EE stake to incumbent BT.
"Our international strategy has not changed," Richard said, while presenting the telco’s Essentials 2020 plan, the successor to Conquests 2015.
Indeed, Orange is working on establishing itself as the number two player in Spain, having made an offer for broadband provider Jazztel in September.
However, it is not having an easy rise from a regulatory point of view. On Friday the telco confirmed that the European Commission has once again stopped the clock on its investigation of the deal. Orange insi sts this is normal practice though and said it expects the probe to resume next week.
Acquiring Jazztel will help Orange to bulk up the fixed line side of its business in Spain at a time when the ability to offer converged services is becoming increasingly important for European operators.
"We continue our path towards convergence," Richard said.
That, and the related growing demand from consumers for high-speed networks are two of the drivers behind Orange’s new five-year plan.
The telco said it will invest €15 billion in its networks over the 2015-2018 period, prioritising high-speed broadband. It will spend €4.5 billion of the total on fibre deployment, fibre being "a tool for the conquest and loyalty of high-value customers," Fernandez said.
It has allocated €5 billion for mobile access spend, including €1.5 billion on 4G, with the aim of extending 4G coverage to more than 95% of its European footprint in 2018.
Interestingly, the majority of the targets under the Essentials 2020 plan refer to 2018, rather than 2020. If my memory serves me correctly, the only time Richard mentioned 2020 was to say that Orange Business Services aims to increase the share of IT services in its revenue mix by 10 percentage points by 2020, which isn’t exactly the most straightforward of predictions.
All of which begs the question, what does Orange plan to do between 2018 and the end of the decade?
Party like it’s 2019?!
Additional reporting by Nick Wood.
