Turning Africa Orange

A major European telco launches cellular services in South Africa as part of a wider African strategy, but what does this mean for local competition?

The writing has been on the wall for some time, with legal action being taken or threatened against a couple of companies back in 2009 for using the colour orange in their name. But, earlier this year, Orange officially launched mobile services into South Africa signalling its intent to expand its connectivity solutions beyond its already extensive footprint on the continent. And with its Orange Business Services unit already operating locally, the likes of MTN Business, Vodacom Business, and others better take notice of this ‘new’ upstart.

Not only does it offer an extensive range of business solutions, but in the international Orange parent it has a telecommunications footprint that some analysts expect will make it a strong competitor in the local market. The group has stakes or operations in 17 countries across Africa and the Middle East, which are largely francophone such as Cameroon, Cote d’Ivoire, Senegal, Mail, as well as other significant markets such as Egypt.

In July this year, France Telecom officially rebranded to Orange signalling its intention to simplify and modernise its profile and image. This completed a process started in 2006, aimed at responding to changing conditions in the telecommunications market and the expansion of the group internationally.

“Most of the group’s employees expected the company name to be aligned with its identity, which is now more than ever based on a collective culture of public service, expansion, and a social partnership,” Stéphane Richard, CEO of Orange was quoted as saying in the press statement announcing the name change.

By partnering with Nashua Mobile in South Africa, Orange is leaving itself room for growth in the business and consumer markets.

Partnering for growth

Tim Walter, the chief officer for strategy and business transformation at Nashua Mobile, says that the company was an obvious choice for Orange to partner with given its network of more than 150 outlets strategically placed across South Africa.

“Nashua Mobile has a strong brand presence and customer loyalty earned through high levels of service, product knowledge, and quality standards,” says Walter.

In terms of the partnership, Orange will have a physical presence within the Nashua Mobile stores, with a demarcated Orange branded in-store module. These will be manned by Nashua Mobile employees who have received training on the Orange products and services and who will provide guidance to inbound or outbound Orange customers.

Walter says that these Orange areas within the Nashua Mobile stores will offer various products and services for the inbound and outbound traveller to or from Botswana and France.

Key to this is the Orange Business Services strategy of keeping its solutions portfolio the same across all regions it operates in. This means that it is only a matter of time before the Nashua Mobile partnership is used as a platform for more diverse connectivity solutions addressing business-to-business in the local market.

Going roaming

According to Nashua Mobile, the initial focus of Orange will be on mobile.

“Both the online and physical stores will offer SIM cards from the Orange footprint, starting with France and Botswana. These will be aimed at professionals or tourists travelling from South Africa to countries in which Orange is already present. This will allow travellers to be better prepared by having a local phone number before their trip. More countries in which Orange operates will be added as the partnership evolves,” says Walter.

Arthur Goldstuck, founder of research consultancy World Wide Worx, believes that this is very good news for South African mobile users as it identifies a gap in the local market offering.

“The biggest issue that Orange addresses is one which has been facing South African business travellers for many years – excessive roaming costs. The amount of money wasted on roaming charges is mind-boggling if one looks at quantifying it. There is also the time spent in trying to get a SIM card overseas. It has become a major obstacle to being more efficient while travelling for business users,” says Goldstuck.

He also believes that Orange is considering a mobile licence to operate in South Africa.

“If the interconnect rate comes down, becoming a mobile virtual network operator (MVNO) becomes viable. In the meantime, Orange might be looking at making an acquisition, with Cell C, Telkom Mobile and Neotel all providing viable options. Any of those companies could give them a substantial footprint in the country but there would still be regulatory and government hurdles to overcome,” says Goldstuck.

Beyond mobile

While mobile might be a major part of its play, this is not the only area where Orange is active. Orange Business Services works across industries and develops a range of connectivity and IT services.

As an example, it has supplied Ecobank with a multiprotocol label switching network to support the pan-African organisation. This saw it implement 16 broadband virtual private network sites and 17 VSAT sites across the footprint of the bank. Already, Ecobank has remarked on increased network flexibility and security as well as improved customer service.

With 72 percent of the top African companies in operation in South Africa, Orange Business Services feels that the time is now right to address the market needs in SA. It is focussed on the multinational corporates, and provides services to the likes of BHP Billiton, SABMiller and Rio Tinto. It has also identified Ghana and Nigeria as other countries poised for significant growth, with special attention paid to the public sector, and banking, mining, retail, medical companies, and energy industries.

Orange Business Services states that it operates in over 220 countries and territories and employs over 30 000 employees in 166 countries. In its Johannesburg operation, it has a team of 60 people, but with the ambition and backing of its parent this is not a small company that can be easily ignored. It also claims to have the world’s largest, seamless network for voice and data and boasts being a four-time winner of Best Global Operator at the World Communication Awards.

Orange Business Services’ development strategy revolves around offering a core range of services to mature markets that include networking, video conferencing, cloud computing, security, and mobility. For high growth markets, Orange Business Services is upgrading its assets to assist companies in going into emerging territories.

Jean-Luc Lasnier, GM for Middle East and Africa, Orange Business Services, told a media roundtable in May 2013 that the company aims to almost double revenue from Africa to €7 billion by 2015. This is up from about €4 billion currently.

Make no mistake, the French former-monopoly telco has been biding its time, planning how it should attack the South African market as part of a wider plan to provide services across Africa. Perhaps, the colours yellow, blue, and red need to start worrying after all when it comes to their business offering and how appealing consumers will start to find this French company.

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