Olaf Swantee, head of Orange Mobile

By Sean Jackson

Olaf Swantee, Head Of Orange Mobile

Olaf Swantee, head of France Telecom Personal Communications Services, talks about life at Orange.

Olaf Swantee may well have 17 years’ experience working for some of the biggest names in the IT sector, but a few eyebrows were raised following his surprise appointment in August 2007 as the new head of France Telecom Personal Communications Services – more widely known as Orange.

When Sanjiv Ahuja stepped down from the top job at Orange, some cellular industry commentators questioned the wisdom of putting an IT man in charge of a mobile network. Could the new appointment signify a begrudging acceptance that mobile services, like IT products, had become a commodity? Swantee thinks not.

“There is a tendency to say ‘this has become a commodity, the customers understand the product, so price and cost efficiency are the most important things’. I believe what sets Orange apart is that we are really investing in innovation,” he says.

Undoubtedly, a number of parallels exist between the IT sector and the mobile world, particularly as markets approach and exceed saturation. Swantee feels that the experience he gained prior to joining Orange will prove invaluable to the carrier as it battles for customers in today’s ultra competitive landscape.

“The market is becoming mature and the IT industry has gone through that phase,” he points out. “For me that is good because I am quite familiar with leading in mature markets, and I can help Orange to execute along those principles of being very successful in mature markets.”

Swantee believes there are three core areas that require focus to achieve success in mature markets. First the carrier should concentrate on improving customer-centricity. “It sounds very obvious,” he says, “but it is difficult to execute.” In a market where the majority of a carrier’s customers are effectively repeat business (90 per cent in the case of Orange UK) customer service becomes mission critical.

“What we have done since August last year is really get back to basics around customers and make sure that our customer services are working properly and that all managers, directors and employees take an interest in trying to move satisfied customers to loyal customers,” says Swantee. “That is extremely important and something I have learned.”

The second area of focus needs to be research and development, he says. Too many firms focus solely on price in mature markets. This can help achieve short-term gains, but is ultimately self-defeating he argues. Orange spends two per cent of its revenues on R&D, this spend helps generates about 500 patents per year for the carrier.

“I have seen many companies in the IT industry that treat their products as a commodity. They have short term success, but in the long term they run out of steam because they are not able to differentiate themselves and, as mobile devices are becoming such an intrinsic part of everyone’s life, you can’t treat it as a commodity and there are so many opportunities to innovate,” he says. Swantee concedes that not all of the patents will be beneficial, but undoubtedly some will.

The third and final area that needs attention in mature markets is, of course, operational efficiency. “There are a lot of examples of costs that don’t really add value and we need to look at that, especially now in this economic climate, and we have still a way to go in this area,” he says. “We have an opportunity in a number of areas, but we’re doing better. You’ve seen us announcing in many markets a simplification of the organisation, reducing bureaucracy, reducing the number of management layers that we have in the company. It is essential for being successful.”

The best growth opportunities for Orange undoubtedly lie in emerging markets. At last count, the carrier had operations in 28 countries. Roughly half of its networks lie in the mature markets of Eastern and Western Europe. The other half (excluding a number of smaller operations in the Caribbean) can be found in Africa and the Middle East. With the exception of the highly penetrated markets of Botswana, Jordon, Mauritius and Reunion, it is Orange’s operations in Africa and the Middle East that Swantee expects to find the best growth.

“You will see us carefully expanding in Africa,” he says, on the day that Orange announces a deal in Uganda. “The reason we’re expanding there is we feel very good about our industrial capabilities in markets where there is a great need for improving communication infrastructure. If there is a company or licence available for mobile and fixed where we can come in with our brand our experience and we very quickly develop a strong, profitable business with great quality of service,” he says.

Swantee was quoted recently in the press saying that he saw Orange as the ‘Telefonica for Africa’. “The Orange brand is synonymous with development, innovation, quality of service, it works really well, so that’s one area we are looking at. But we are not shying away from our existing footprint in mature markets and we’re looking at further potential for consolidation or cost reductions.”

Swantee is strong on the subject of industry consolidation. When Hewlett-Packard bought Compaq, he not only survived the merger, he thrived. Rising from the position of director of sales and marketing for Compaq in Switzerland to senior VP Technology Solutions Group Sales and Software EMEA for the new look HP.

“Mergers and acquisitions are just one part [of business]. Of course, it is an important part, and I’ve seen good ones and bad ones. I’ve learned that you need to be extremely careful and very conservative. I think it is very good that Orange is very conservative and selective. There are a lot of projects that come to us when you have ?7.8bn of cash generation per year, but most projects we say no.”

Orange said “no” to TeliaSonera recently of course. The fact that Orange was able to turn its back on the deal after carrying out a good deal of work is testament to both Orange and Swantee’s conservatism and experience. “There are so many examples, after so much work, of staying in the process, but we stepped out because we believe the price was too high,” he says.

Orange may be conservative but it is not afraid to spend money on development. With 18 labs around the world, it employs 3,500 engineers. Swantee is confident that Orange spends more on R&D than its rivals. “Orange is generating revenues of ?53bn and six per cent of our revenue is devoted to all the new stuff like applications, content and those areas are absolutely related to being an operator.

“We don’t see ourselves as just an operator, we see ourselves as an international communications provider that provides services, information, we have one brand across different vehicles whether it is fixed, mobile, broadband or TV,” he says.

Data represents 18 per cent of Orange’s revenue and 11 per cent of its customers generate 71 per cent of the data over the network. One of Swantee’s ambitions is to drive that 11 per cent up. The key areas of networks, devices, tariffs and content are all finally starting to fall into place according to Swantee.

“If you buy a cell phone in one of our shops, in 80 per cent of the cases, our customers will have a device with an Orange signature which is a menu that is the same across different operating systems and different devices,” he says.

Orange’s strategy for owning and controlling the entire eco-system of the mobile internet sounds ominously like a walled garden, although Swantee is keen to stress that this is definitely not the case. “This is an industry that is very different to the IT industry. We have a fragmentation of operating systems and different platforms, there is Symbian, Apple, Microsoft, LiMo, what we try to do is provide one menu or view across all the different platforms.”

When Sanjiv Ahuja stepped down he announced that he was satisfied that his mission to integrate the firm was complete. In some respects he was right; these days the company reports as one, but it would be na????????????????ve to think absolute integration had been achieved. The carrier has 113 million mobile customers and 175 million total customers, spread across 28 markets, each with its own range of challenges and opportunities.

Olaf Swantee is under no illusions regarding the task that lies ahead: “We need to be a leader in maturing markets, we need to work on the priorities that I’ve just outlined and there is a tremendous amount of work we have to do.”

Career history

1987 Receives a bachelor degree in economics.

1989 Receives European MBA from the EAP (Ecole Europeenne des Affaires) in Paris.

1990 – 1992 Begins career in IT with Compaq in Germany as a product manager of its European PC division.

1994 – 1997 Joins Digital as Marketing PC Director in Geneva

1997 Executive Adviser to the Chairman and CEO of Digital in the US.

1998 Returns to Compaq as director of sales and marketing for Switzerland.

2002 Following Hewlett-Packard’s acquisition of Compaq, holds a series of senior international leadership roles in sales and marketing, rising to managing director for the Western European region.

2005 Promoted to senior VP Technology Solutions Group Sales and Software EMEA.

2007 Becomes head of France Telecom Personal Communication Services (Orange mobile).