Orange Zest in UK Bucks Wider Enterprise Slump
Europe's enterprise markets do not look like happy hunting grounds for some of the region's biggest telcos.
Already rocked by an accounting scandal at the Italian unit of its global services division, the UK's BT Group plc (NYSE: BT; London: BTA) remains troubled by the gloomy outlook in some of its public sector and corporate markets. Germany's Deutsche Telekom AG (NYSE: DT) this week reported a sharp earnings fall at its T-Systems International GmbH business and failed to land any "big deals" in the first three months of the year. And France's Orange (NYSE: FTE) revealed that first-quarter revenues at Orange Business Services were 2% lower than in the year-earlier period, at about €1.8 billion ($2 billion), because of pressure on older network offerings. (See BT Cuts 4% of Jobs, Plans Global Services Overhaul, DT Gets Familiar Earnings Boost From US Biz and Orange Doffs Beret to Spanish Biz for Q1 Growth.)
But the small UK and Irish unit of Orange Business Services seems to be defying the odds. Although it does not break out details of sales, revenues have been growing "year on year" despite the declining importance of traditional offerings, says Lorenzo Romano, the unit's recently installed managing director. Six years ago, networks were responsible for about three quarters of sales in the UK and Ireland, with the rest coming from a mixture of other IT services, Romano tells Light Reading. Today, the split is about 55% from networks and 45% from other business.
Shifting the service mix this way while skirting a sales slump is an achievement that many other telcos will envy. It also means that Orange is set to grow its UK and Irish workforce, which currently has about 500 employees (just a fraction of the 21,000 within the whole of Orange Business Services), at a time when other service providers are making cuts.
"Right now I have 22 open heads in the UK in the area of sales," says Romano. "That investment in headcount is a result of the launch of new services… and ensuring we have the right number of people to support the areas we are developing in our digital strategy."
Recent growth owes much to the previous alignment of sales functions with new growth areas, says Romano, who was the sales and marketing director for the UK and Ireland before he stepped into the leadership role this month. "We've been very conscious that revenues will come from new areas and that you can't rely on networks as the revenue generator or you will get left behind," he says.
Much of the current sales focus is on an SD-WAN product that Orange added to its Easy Go network-as-a-service platform as recently as March. The emergence of such on-demand capabilities has clearly given rise to new and disruptive forms of competition, but that has also led to considerable uncertainty, says Romano. "In the past when you chose a vendor you knew you were making the right choice," he explains. "Now there are a lot of new vendors as well as established service providers like Orange that are evolving, and the customer needs to decide who is fit to handle their needs." (See Orange Adds SD-WAN to Hybrid Net Strategy.)
Orange is hardly the first telco to insist that with its experience, global presence and brand reputation it is a "trusted advisor" to organizations that are digitally transforming their businesses. But its engagement with existing and prospective customers is certainly proactive. Just last week, the operator invited companies to an event in London where it sought to explain the SD-WAN strategy and what that means. Such gatherings have been as educational for Orange as they have for the telco's audience, it seems. "What was interesting and apparent is that it is a very confusing marketplace at the moment, and that customers need guidance and assurance," says Romano.
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