AI and bots aid Orange’s transformation drive

Orange Group said it is on track to achieving the ambitions of the ‘Lead the Future’ strategic plan it unveiled in early 2023 and indicated that the application of artificial intelligence (AI) technology and robots, in addition to job cuts, have helped it to achieve some of its goals.

During Thursday’s earnings call, Orange Group CEO Christel Heydemann devoted some of her opening remarks to illustrating how Orange uses data, AI, and process automation to change certain working practices across the group.

“For example, we use AI to predict the marketing offers most likely to be appealing and relevant to our customers. This approach is driving measurable revenue increases in many of our countries, and we are actively be replicating this work in other countries,” she said.

Orange said it introduced 146 “high-impact” AI use cases in 2023 and also noted that implementing robotic process automation (RPA) technology enabled it to save 500,000 hours in 2023.

“This is particularly helpful in areas of the business with many repetitive process driven tasks, such as customer contact centers,” Heydemann said.

Orange has also developed its own internal genAI tool, now active with 1,300 daily users.

In the area of networks, Heydemann said radio configuration is automated in most countries where the group is active. “We are already able to automatically change 20 million [radio] parameters per month. Some of these automation use cases leverage AI to reduce energy consumption.”

Elsewhere, Orange is introducing AI to “optimize our capex decisions and network planning, as well as to implement fast root cause analysis and predictive network maintenance. Last but not least, we are pooling our operations via two network operating centers, one in Middle Eastern Africa and one in Europe,” she said.

Overall, Orange is now halfway to its target of achieving cost savings of €600 million (US$646 million) by 2025, although Heydemann conceded that a large portion was achieved through headcount reductions. “We are fully confident of reaching the €600 million target in 2025 as we accelerate major cost savings programs in the area of sourcing, network, IT and real estate,” she said.

In 2023, as a whole, group revenue increased by 1.8% to €44.12 billion ($47.5 billion), boosted mainly by the ongoing positive performance in Africa and the Middle East. Here, revenue rose 11.4%, compared with a 1.4% decline in France and a 2.2% rise in other European markets.

Group EBITDA after leases increased 1.3% to €13 billion ($14 billion), while consolidated net income rose 10.5% to €2.89 billion ($3.1 billion). Capex was also 6.7% lower at €6.8 billion ($7.3 billion) as fiber rollout reaches maturity in France and Spain.

A deal of work ahead

While Heydemann was bullish about Orange’s performance last year, there is no doubt that the group still has much to accomplish as it continues with its business transformation plan.

While it has now offloaded OCS and Orange Studio, it has yet to conclude the planned sale of Orange Bank, and is also in the midst of transforming Orange Business.

In terms of enterprise services unit Orange Business, Heydemann was able to report slight revenue growth of 0.2% to €7.9 billion ($8.5 billion) in 2023. Here, growth in new areas such as Orange Cyberdefense, digital and data services is helping to offset a decline in legacy fixed voice and data business.

“We continue to see an improving trend in 2024,” she said, noting that the business was already showing an improved performance in the second half of 2023 compared to the first half of the year.

Meanwhile, Orange has not yet closed one major transaction: the planned €18.6 billion ($20 billion) merger of its operations in Spain with those of Másmóvil. However, Heydemann noted that the European Commission is finalizing its review and will provide its decision by February 22, 2024.

“We are confident that we will obtain clearance by then, which will lead to the closing of the deal by the end of the quarter,” she said.

While Heydemann could not provide details on potential remedies that will be required to secure approval, she did note that Orange Spain has agreed on an optional national roaming agreement with Digi Spain.

Indeed, Romania-based Digi Communications has emerged as something of a savior for Orange Group and Másmóvil as they pursue their negotiations with the European Commission.

In December, Digi announced that it agreed to acquire spectrum assets from Másmóvil for €120 million ($129.3 million) and noted it had concluded a separate contract on the option of national roaming with Orange Spain, allowing Digi Spain to access all mobile technologies of Orange and its affiliates.