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Quad-play is so 2016; we’re all about the pent-play – Orange

Orange

If convergence is the name of the game in 2017, Orange is looking to up the ante in the multi-play markets.

The golden bullet for many operators has been the heralded quad-play. It’s the end of a very long, and sometimes very expensive, road for many operators, but the rewards can be justified. That said, Orange is well on its way to the ambitious multi-play finish line, but a fifth offering in its digital banking service will see it go one level higher than most can aim to achieve in the near future.

Rumours of an Orange bank have been circulating for some time, owing to the success of its payment proposition in Africa, though the acquisition of Groupama in April 2017 was the official confirmation. From there the process of meeting financial regulation and legislation demands was a tricky one, but a successful trial run in Poland showed the world telcos can operate in the financial arena. It’s a fifth offering in the multi-play area, and one which many competitors might struggle to replicate.

“Our strategy is not to go towards pan-European consolidation, but to be stronger where we are operating,” said Ramon Fernandez, Delegate Chief Executive Officer in charge of Group Finance and Strategy, in a meeting with Telecoms.com in Paris. “The key for us, in the countries where we operate is to become a convergence player.”

Part of that means some serious investment, or at least playing nice with competitors in other markets. The €3.4 billion acquisition of Jazztel in Spain took it into the fixed market, as did deals with rivals in Romania and Belgium. But the bank is a genuine bit of differentiation. It could be seen by some as a very risky move as it is a long-way out of the telco comfort zone, but maybe that is what is needed in the industry.

The risk of OTTs stealing revenues from the telcos has been very evident, but part of the reason the OTT business have been successful is that they do not fear going into areas where they have little or no prior experience. Think search advertising giant Google heading into connectivity, or eCommerce giant Amazon into cloud computing. These are not the traditional stomping grounds, but fortune favours the brave and extinction favours the overly-cautious. Much of the industry might be favouring cautiousness, but Orange is taking a bold step.

By the end of 2018, the target for the finance team will be revenues of €400 million, though this could be surpassed considering the success of the African business. Breakeven point will be in roughly five to six years, when Fernandez, who will act as the President of the bank, will aim to have two million customers in France. A bold statement considering this would surpass the number of customers which many of the traditional banks have, though it was pointed out the business already has 30 million connections in the country; cross-selling is a genuine opportunity.

“The first thing we have to look at is not only the mobile market, but the convergence market,” said Fernandez. “We all tend to focus on what is happening in the mobile market, but in fact half our clients our convergence players. In Spain its more than 80%. So the key is are you able to demonstrate to your customers that you have the best quad-play offer, maybe the bank could become the fifth play, which is going to get more faithful customers.

“They like to have one bill, and the benefits of the discounts from the convergence, but above all they have a quality service, a quality network, and quality customer service. It is going to become more and more difficult to only look at the price of a mobile contract. It is going to be a smaller and smaller stand-alone segment.”

In truth, convergence means different things. When an operator is speaking to a journalist, it means you can offer a better service to customers, discounts and an easier lifestyle as you don’t have to worry about several bills. It’s all about the customer.

When an operator is talking to staff or investors, we can imagine the conversation is all about capturing the customer with flashy lights and then making it difficult to leave. Short-term thinkers will soon realise it is difficult to leave a supplier when you have so much tied up with them. Imagine a pent-play (five offerings) and having to price-compare five different products. That is the first-world definition of a nightmare.

Orange’s strategy is likely to be somewhere in the middle; something in the balance of every for the customer, and success for the business. When a healthy balance is struck, both sides of the coin can be very happy.

In short, adding a fifth offering the multi-play probably puts Orange in a very envious position. Want could come next?


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