Orange puts emphasis on growth in Africa and the Middle East

CAPE TOWN--Orange has ambitious plans for its operations across the Middle East and Africa (MEA) and said it is in a position to invest in its 20 businesses in the region to drive growth.

Marc Rennard, Orange EVP for Africa, Middle East, and Asia

Marc Rennard, Orange EVP for Africa, the Middle East, and Asia

Speaking to FierceWireless:Europe at AfricaCom here, Marc Rennard, EVP for Africa, the Middle East and Asia, also confirmed plans to place all 20 units under one holding company, replacing the multiple holding companies that currently exist and thereby creating a simpler and clearer management structure. The total number of employees in the region is 21,000.

However, Rennard refuted previous speculation that Orange was planning to list the new holding company, saying that the move is merely an internal company process and that the MEA businesses will still be "all Orange". He expects the process to take around six months, but added that there is no urgency. In fact, he proposed the solution as long as six years ago, he said.

Rennard is clearly very pleased with the way his division has developed and continues to do so, and said 2014 will be its best year since the Arab Spring and the political crisis in West Africa. He confirmed that Orange is still mulling an exit from Kenya as one option for its business there, and said the company completed the sale of Orange Uganda on Tuesday while he was at AfricaCom.

However, further sales do not appear to be on the agenda: indeed, Rennard said Orange only considers exiting a market when it sees no possibility of becoming the number one or two operator. Kenya has been earmarked for a potential sale because the country has a dominant player in the form of Safaricom, and is a difficult market in which to compete. Rennard remarked that Orange generates below $100 million (€80.2 million) in revenue in Kenya out of a total $6.5 billion across the MEA region.

Elsewhere, Orange is enjoying particularly strong growth in markets such as Egypt, Ivory Coast, Democratic Republic of the Congo (DRC), Mali, Tunisia and Iraq. Key focus areas for the future include the further development of B2B services--an area in which Rennard concedes there is room for improvement--mobile broadband, and mobile payments through Orange Money.

In terms of mobile broadband, Rennard said the rollout of 3G is still the main focus in Africa this year and next. LTE is being rolled out in a limited number of Orange markets this year such as Senegal, DRC, Ivory Coast, Botswana and Mauritius, "but we will not make money from it yet," he said.

A strong business strategy for LTE in African markets will be fixed-mobile substitution (FMS) in areas where fixed networks are very poor, such as in DRC. Rennard also said that Orange will develop and maintain its existing fixed networks in Mauritius, Kenya, Senegal, Ivory Coast and Jordan but has no plans to build new fixed networks in MEA.

Rennard predicted Orange will sell around 900,000 smartphones in MEA this year--more than double its target of 400,000--even though the sale of devices is "not our job". He added that the arrival of sub-$50 smartphones in Africa has made this level of sales possible.

However, many market players regard taxation levied on smartphones in some countries as a prohibitive factor to smartphone purchases: in Niger, for example, taxation on smartphones is 40 per cent, compared to 5 per cent in Ghana.

In summary, Rennard believes that Africa in general is a highly innovative market that has also enabled Orange to develop some unusual and interesting services including 'Bonus Programme'--which provides a rebate to users when they are close to a nearly empty mobile base station in order to encourage them to use their phones more--and 'Emergency Credit', which effectively lends a user credit when they are down to zero and recoups the money when they next top up. According to Rennard, the latter service generates 6 per cent of Orange's revenue in the region.

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