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Orange threatens to pull out of emerging markets

Orange has seen its consolidated net income after tax almost double year on year for the full year 2013

Orange has threatened to pull out of the emerging markets it operates in unless it can become a market leader in those countries.

Marc Rennard, Orange’s executive VP for Africa, Middle East and Asia, said at a roundtable briefing at Mobile World Congress in Barcelona last week that Orange is looking to increase revenues from its emerging markets to €7bn by 2015, compared with €3.4bn today. However, he added that if the firm cannot become the number one or two operator in those markets, then it will look to exit them.

The challenge facing Orange is how to build out network infrastructure cost effectively, particularly in larger African markets, according to Eden Zoller, principal analyst at Ovum.

Although Rennard said network sharing will help with this, the other challenge is moving users beyond voice and SMS to more advanced data services.

“Rennard said that Orange would be interested in joining forces with other operators to collectively source phones for emerging markets, using their collective buying power to pass cost benefits onto consumers,” said Zoller.

“However, the pricing of data services beyond SMS to price sensitive consumers is an issue that needs to be addressed and this is problematic. Rennard did not have any easy answers but said part of the answer lies in new business models for mobile broadband. Exactly what these business models should be was not clear, particularly as Rennard had reservations about how far mobile advertising can help in this context.”

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