Orange proves convergence should be telco business basics

A decade ago, Orange started trialling convergence in the Slovakian market, but today the success proves it should be the foundation of every successful business.

“Europe is a success story and convergence is the jewel in our crown,” said Ramon Fernandez, Orange CFO and Head of Europe.

In fairness to the Orange business, it has a way of investing in ideas and leading innovation for the European telecoms industry. It wanted to diversify into financial services, so it bought a bank. It wanted to drive home convergence, so started investing heavily in fibre. The smart home, security and energy services are on the horizon, once again proving Orange does not wait around for industry consensus before making its move.

Convergence is a trend which has now seemingly caught fire in the telecoms industry, with Orange arguably the most advanced telco strategically worldwide, but perhaps it should no-longer be considered innovative. Any telco with any sense is positioning themselves for a convergence play.

In the UK, BT is making the ‘Halo’ initiative the centrepiece of the consumer business, while Vodafone’s purchase of Liberty Global’s cable assets in Germany, Hungary, Romania and the Czech Republic sets the telco in the same direction. Convergence is not innovative anymore, it is something that telcos just have to do to stay relevant.

Looking at the Orange business, Fernandez said the telco now has 10.6 million convergence customers across Europe; 5.8 million in France, 3 million in Spain and the rest split across the remaining territories in Europe. Convergence customers now account for 40% of revenues across Europe.

In terms of Group revenues during the last period, Orange reported growth of 0.8% to €10.57 billion for the third quarter, adding to €20.57 billion brought in over the first half. While financial growth might not be eye-watering, the foundations being laid through the convergence strategy offer excellent opportunities in the future.

After years of investing in both mobile and fixed networks across Europe, Orange’s fibre deployments are progressing very effectively, the connectivity foundation is sound. Few telcos can compete with Orange in terms of assets across the bloc, but the customer retention benefits of convergence are allowing Orange to explore new services. Security products are being launched, connected objects are being sold, banking is expanding, energy services are being played with and the team is investing in a smart home platform. Orange is making the evolution through to Digital Service Provider, built on the foundation of connectivity convergence.

While this is an enviable position, it is not one which can be created overnight. Orange has been investing towards the convergence strategy for years, and now other operators are playing catch-up. With results proven, perhaps we should stop talking about convergence as innovation, and just the way telcos should do business.