Is Orange less bullish on 5G as CEO presents new strategic plans

Orange Group CEO Stephane Richard today announced details of Engage 2025, Orange’s new strategic plan, without targeting significant revenue from 5G services.
Orange 5G network serviceArtificial intelligence and data will be at the heart of the reinvention at Orange aimed at improving customer experience and to make our networks smarter and the whole company more agile, Stephane Richard said.

Orange will put AI and data at the service of its networks in order to optimise the deployment of new mobile sites and those of fibre. These new technologies will also facilitate day-to-day network maintenance, helping to reduce costs and improve quality of service.

AI will help Orange to improve the efficiency of its internal processes and its back office activities, such as fraud detection.

Orange will open an Orange Digital Centre in all Group regions and in its operational divisions in France by 2025.

Orange will offer FTTH to more than 65 million households in Europe by 2023, underlining its leadership in Europe in terms of fibre. Orange will rely on the gradual increase in speeds and the constant improvement in quality of connectivity in homes (Homelan) to offer new services.

No significant revenue from 5G?

The plans presented by Stephane Richard indicates that the telecom operator is not bullish about the growth opportunities from 5G services.

In mobile, Orange will focus on 5G. After an initial commercial launch in Romania, 5G will begin to be rolled out in most of the European countries in 2020. 5G will deliver speeds up to 10x faster.

From 2023 – when core networks transition to 5G – Orange will be able to offer lower latency and implement network slicing.

Orange has started to construct future use-cases jointly with its B2B 3 customers and in 2020 will inaugurate an open centre of co-innovation in Chatillon (France) which will be dedicated to new 5G use-cases.

Orange will optimise, develop and derive value from its infrastructure. In Spain and Poland, Orange plans to share future FTTH deployments with other operators via FiberCos, potentially involving third parties. Orange will also continue to optimise its copper network in France.

Orange will rely on RAN-sharing agreements to optimise the deployment of its mobile infrastructure, particularly 5G, in terms of pace, coverage and financial capacity. This was the impetus for the existing agreements in Poland and Romania and those signed in recent months in Spain and Belgium.

Orange will create TowerCos in most of its European countries to derive value from its 40,000 towers of its mobile network in Europe.

Orange already announced the disposal of 1,500 non-strategic sites in Spain to Cellnex for 260 million euros.

In 2020, Orange will have deployed 4G in almost all countries where it operates and will rely on RAN-sharing agreements and innovative technologies (e.g. lighter pylons) to extend its coverage in rural areas.

In addition, Orange will reinforce its multi-services strategy so that they represent 20 percent of turnover in the area by 2025.

Orange Money will reach about 900 million euros in revenue in 2023.

The Group’s objective is to have a compound annual growth rate (CAGR) in revenues for the 2020- 2023 period of around 5 percent for the region.

Orange will accelerate the transformation of its B2B activities to take advantage of the convergence of telco/IT businesses.

Orange Bank, having attracted 500,000 customers in its two years of operation, will be launched in all European countries by 2025.

France services revenue will experience moderate growth in the 2020-2023 period, mainly due to increased FTTH penetration and mobile (5G) services, which secures market share and encourages the acquisition of new customers.

Spain will return to growth in 2021, with increasingly optimised use of its brands in order to capture their value potential, and increased B2B and wholesale opportunities, excluding those with international operators.

Europe will have growth that is better than the market average in each of its six countries, principally led by strong commercial momentum in convergence thanks to the deployment of ultra-high speed broadband.

Orange will increase use of digital tools in its everyday dealings with its customers. By 2023, the number of calls to call centres in Europe will have decreased by 55 percent. Orange will rely on Djingo, which will become a direct voice-controlled interface with the customer, and on the “My Orange” application, which will double the number of users by 2023 to reach nearly 50 million.

Orange will invest more than 1.5 billion euros in a skills-building programme open to all employees around the world. Specifically, 20,000 employees will be trained in network virtualisation, artificial intelligence, data, cloud computing, code and cybersecurity.

Orange will pursue operational efficiency programs and aims to achieve, by 2023, net savings of one billion euros from within a defined perimeter of indirect costs from telecoms activities at the end of 2019 of 14 billion euros.

eCapex will increase by approximately 50 million euros in 2019 and by around 200 million euros in 2020 due to the RAN-sharing agreements in Spain and Belgium. This will then stabilise in 2021 before starting to decline from 2022, once the bulk of FTTH deployment in France is completed.

The Group aims to reduce the eCAPEX/sales ratio to around 15 percent by around the end of 2023 compared to around 17 percent in 2018.