Orange to spend €15B on networks to drive recovery by 2018

Orange unveiled a new five-year plan that will see the France-based operator spend more than €15 billion ($15.9 billion) on its fixed and mobile networks between 2015-2018 in order to set it apart from rivals and fuel its recovery.

The new Essentials2020 strategy replaces the former Conquests 2015 plan and sets out a number of targets for the coming few years, including the objective to derive €1 billion in revenue from new services such as connected objects and mobile finance by 2018.

The company also said it does not expect revenue or EBITDA to be above 2014 levels until 2018, noting that EBITDA would bottom out at between €11.9 billion and €12.1 billion in 2015.

In an initial reaction to the new plan, Jefferies analysts noted that the new guidance implies a capex upgrade of around 15 per cent for 2015-2018. "Core messages from Essentials2020 relate to transforming network quality/speed in both fixed and mobile," the analysts said, adding that Orange "is likely to argue that higher capex is the price to pay for stronger earnings."

A central target of the Essentials2020 plan is to triple average data speeds compared to 2014 on both fixed and mobile networks by the end of 2018. As part of its mobile network ambitions, the company is targeting more than 95 per cent 4G coverage across its European footprint in 2018, and plans to launch Voice over Wi-Fi (VoWiFi) in France during 2015. The company also aims to improve mobile coverage across France with a focus on rural areas and major transport routes.

In Africa and the Middle East, the company plans to launch 4G in seven countries in 2015 and in the majority of countries in that region by 2018. It also intends to build on its strategy of offering affordable smartphones in that region by 2018.

Orange will also continue to invest in its fibre networks in France, Poland and Spain--where it is in the process of buying Jazztel--and said it will test the cable market in Belgium with a new TV offering in 2015.

"With the launch of Essentials2020, we are writing a new page in Orange's history. This five-year strategic plan is focused firmly on our customers. Our ambition is based on a strong commitment to provide them with an unmatched experience on a daily basis," said Orange CEO Stephane Richard.

Orange clearly regards Essentials2020 as its path to revenue and profit recovery following a period of considerable disruption on the French market in the last few years, particularly since the launch of low-cost mobile plans by Iliad's Free Mobile in 2012. The company said its good business performance in 2014 has put it in a significantly better position today to embark upon the next stage of its development.

As well as laying out its targets for the next five years, Orange has also unveiled a new marketing campaign and new brand strategy. While the company logo will remain the same, Orange is changing its brand identity, including the addition of five new colours (blue, yellow, violet, green and pink) to the existing palette.

In 2014, according to Millward Brown, the Orange brand had an estimated value of $15.5 billion (€14.6 billion), ranking it 62nd among global brands and 7th in the telecommunications sector.

For more:
- see the Orange Essentials2020 release
- see the Orange release on its brand strategy

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