Orange Unveils Group Strategy

Orange creates a new group strategy with aggressive financial targets, alliance program, and integration goals

June 24, 2003

8 Min Read

LONDON and PARIS -- Orange SA today unveiled its new Group strategy - building financial growth through a focus on customer intimacy, capitalising on its intelligent network, developing key industry alliances, and implementing a new group structure to fully utilise the power of the Orange group and deliver seamless services to its customers across the world.

Orange is implementing a common technology platform across the entire Orange Group, adding intelligence to the network infrastructure to deliver new services and applications quickly and consistently to its customers.

Orange also announced that it intends to join the alliance with TIM (Telecom Italia Mobile), Telefonica Moviles and T-Mobile to deliver its customers an enhanced customer experience through seamless voice, data and mobile internet services across multiple markets.

Orange outlined key financial targets for the Group in 2003:

  • on track to meet guidance of 5% revenue growth in 2003 on last year’s reported revenue figures

  • EBITDA of at least €6.2bn in 2003

  • €2.6bn of tangible capex to be added to balance sheet in 2003

Orange also announced new targets for the Group for 2004 and 2005:

  • total revenues to grow more rapidly in 2004 and 2005 than in 2003

  • EBITDA to increase by between 15% and 17% per annum from 2003 to 2005

  • EBITDA margin (as a percentage of total revenues) to approach 40% in 2005

  • cumulative operating free cash flows of €14bn in the 2003-2005 period

  • operating free cash flows to increase by 40% to 45% per annum from 2003 to 2005.

  • capex to sales ratio expected to be around 11% in the long term

Orange also announced that, in light of falling interest rates and the growing operating free cash flow of the Group, it has decided to exercise its option to redeem for £272 million all of the Orange plc senior notes that were due in August 2008. These senior notes will be repurchased on August 1 2003 at the redemption price, including accrued interest of approximately £283 million on August 1 2003. The exercise of the options generates a positive net present value for Orange.

Speaking at the Orange strategy event in London today, Sol Trujillo, CEO of the Orange Group, said: “We are entering a new stage of the mobile communications industry that requires a new model for growth. It is time for us to rise to the challenge and deliver that growth by building and capitalising on our technology portfolio, by building alliances with the right partners and by working as a Group to ensure that we deliver the right services, in the most simple and effective way to our customers.”

working as an integrated Group

Orange is being integrated to work as one company with a consistent global strategy, executed locally. Orange is building a centralised open technology platform across the group, delivering benefits including a seamless and consistent experience for Orange customers and clear cost savings as well as an enhanced brand experience for customers across Europe.

The new organisational changes will see a more global approach to policy to ensure the Orange Group operates consistently and effectively. The Orange Group will take a more centralised approach to those areas where it makes clear business sense to leverage its size and strengths. This structure will give Orange transparent internal reporting of all financial, marketing and customer data.

footprint strategy

Orange is now focussing its footprint on the new Eurozone (including countries joining the EU between now and 2007).

All existing controlled operations within the Orange Group will have to meet the following financial targets:

  • EBITDA positive in 2003

  • operating free cash flow positive in 2004

  • by 2005, we want to have a footprint where we are number 1 or number 2 in each country or have a value share in excess of 20%

In the coming months, key industry alliances that expand the Orange footprint without increasing spend, as well as technology partnerships will be announced to ensure Orange maximises its network capabilities and expands the services available to customers across Europe and beyond.

One such alliance was announced today with Orange stating its intention to work with TIM (Telecom Italia Mobile), Telefonica Moviles and T-Mobile to create an alliance of world class members, committed to delivering both consumer and business customers with an enhanced customer experience through seamless voice, data and mobile internet services across multiple markets. The new alliance, initially spanning Europe will enable Orange to offer new and familiar services to Orange customers in countries where it does not have a presence.

Orange in business

Such alliances will be of great benefit to Orange corporate customers and will serve to create a leadership position across its principle markets, making it the number one choice for businesses – as it is in France. Orange is intensifying its focus on the business market. Orange already works with over half of the Fortune 100 across its eight major markets in Europe. Synergies with Orange parent company France Telecom in this area are clear. Already, Orange has begun work with Equant – part of the France Telecom Group - to offer GPRS services for VPN’s across most of its footprint, and there are already mutually profitable partnerships in place with companies including Palm, Oracle and Fujitsu. Recent business client wins include Air France, HP, Goodyear, Mitsubishi Electric and Norwich Union.

customer intimacy

Today Orange also outlined how it intends to retain its leadership in the area of customer service, by delivering a needs-based segmentation strategy, allowing it to deliver relevant products and services in a relevant way to the customer.

Customer segmentation has traditionally been based on criteria such as age, occupation and gender. Orange recognises that traditional segmentation models do not necessarily reflect how a customer uses their phone and that it is more relevant to segment customers according to their needs and lifestyle. In order to grow the market, in addition to focusing on high-value customers, Orange will also focus on new segments which offer potentially higher value.

Trujillo said: “We plan to talk much more to the customer, find out what their communication needs are, what applications they want, how they want to be served and how they want to communicate with us. For example, some will want single point access, from fixed line, Internet and mobile communication services, others may simply require mobile applications. To achieve the ability to get much closer to the customer, and collect data about the customer, we intend to create new IT systems and optimise its existing systems to enable it to use this data in a meaningful and rapid way. We believe that this focus on the needs of the individual will prove beneficial both for the customer and the business, engendering customer loyalty, building trust and, in turn, driving revenues.”

intelligence in the network

Orange is also focused on capitalising on the intelligence available in present and future networks. As network capabilities increase and voice and simple data services are supplemented by more sophisticated services, the intelligence of the Orange network becomes ever-more integral.

Trujillo explained: “The network itself – rather than the device – can be used to deliver services and applications. The network knows how you have personalised your device. It knows where you are, who you are and what you do. It enables us to deliver a more consistent seamless customer experience.”

new international team

Finally, Trujillo announced his new highly experienced international leadership team, formed to implement and drive the new Orange strategy across the world. Trujillo said: “Sanjiv Ahuja, Chief Operating Officer, is one of the best technology-based executives and will help transform Orange into a truly integrated company. Wilfried Verstraete, Chief Financial Officer, has vast experience at Mobistar and Wanadoo and has all the relevant skills to help me move Orange to the next chapter. Bill Stewart is now heading Strategic Marketing, getting to know our 45 million customers and creating the model for execution for our country managers. Richard Brennan, Global Brand, Marketing and Products, has been with Orange since the beginning and will be driving the many innovations that will set Orange apart. Simon Cartwright is another old hand at Orange and heads our Human Resources team, leading the ‘people’ element of Orange. The in-country businesses will deliver the customer experience and, where necessary adapting local tastes. Didier Quillot and John Allwood both have long experience with Orange and have guided their respective operations to new heights. Brigitte Bourgoin will be working with the remaining markets to bring a progressively larger slice of growth and define and deliver targets.”

Trujillo concluded: “By bringing all of the Orange countries into the fold, we will be able to strengthen and grow our business and take full competitive advantage of our size, our international scale and the considerable expertise we have in all of our countries and to truly focus on our customers. We are aiming to deliver group wide technical platforms and enablers with consistent technical interfaces.

“These are ambitious aims. That’s why I’ve assembled a world class management team to deliver on those aims. They’ve done it before, and they’ll do it again to ensure that the future’s bright, the future’s Orange.”

Orange SA

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