New IP

Orange to Be All-IP by 2020, Says AMEA Boss

Orange is planning to shut down PSTN networks across its entire footprint and run every service over all-IP technology by 2020, according to Marc Rennard, the operator's senior executive vice president in charge of international operations in Africa, the Middle East and Asia (AMEA).

The operator is conducting a pilot in Mauritius and plans to move faster in markets where it owns fixed-line networks.

"Each time we study the case there is value to move more rapidly to save costs," said Rennard at a presentation about the operator's Africa and Middle East strategy in London earlier this week. "First we will address countries where we own incumbent operators, such as Senegal, Ivory Coast, Jordan and Mauritius -- when you are purely mobile there is not exactly the same value."

Most of Europe's biggest operators are investing in all-IP networks, and plotting the shutdown of older PSTN technologies, as a way of reducing costs and developing the service agility they need to challenge over-the-top (OTT) rivals such as Google (Nasdaq: GOOG) and Facebook .

But Orange (NYSE: FTE) is one of only a small number to have announced firm targets for the all-IP migration.

Probably the most ambitious player in that regard is Germany's Deutsche Telekom AG (NYSE: DT), which aims to complete its all-IP transformation in Europe by 2018 and has already turned off the PSTN network in Macedonia and Slovakia.

At this year's Mobile World Congress, Deutsche Telekom indicated the use of all-IP and cloud-based technologies would allow it to save €1.2 billion (€1.3 billion) in costs by 2020, with €500 million ($555 million) of those savings coming outside Germany. (See Deutsche Telekom Turns On Pan-European IP.)

According to Claudia Nemat, Deutsche Telekom's head of Europe and technology, that €500 million would include €200-250 million ($222-277 million) from harmonization of platforms and reduced spending on vendors, €200 million ($222 million) from simplification of technical services and about €50 million ($55 million) from PSTN shutdown.

Nevertheless, the main goal is to facilitate the efficient development and launch of new services in a number of different geographical markets. Deutsche Telekom's grand plan is to replace many of the facilities it maintains for specific countries with a centralized "factory," producing and supporting services that can be rolled out across the entire footprint.

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While Orange has yet to provide more details regarding the efficiency gains and other benefits it expects to realize from all-IP transformation, slashing costs and tackling the OTT threat are clearly of paramount importance to the French company.

During Thursday's presentation, Rennard and Ramon Fernandez, Orange's chief financial officer, unveiled a target of increasing sales by 20% in Africa and the Middle East between now and 2018 and indicated that EBITDA should grow at an even sharper rate. (See Orange Aims for 20% Sales Growth in Africa.)

Similar to Deutsche Telekom in central and eastern Europe, Orange expects to reduce operating expenses partly through the consolidation of equipment, outlining plans to monitor networks in ten African markets from facilities in Abidjan (Ivory Coast) and Dakar (Senegal).

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