Orange Sticks to High-Fiber Diet
Fiber and convergence in action
Orange is aggressively pursuing its fixed and mobile convergence strategy across Europe. Via greenfield deployments, acquisitions or partnerships, the operator is gathering the assets it needs to offer fixed and mobile services to individual consumers as well as entire households.
In Poland, Orange hopes that converged services and fiber access will improve its financial performance. Poland is one of the fastest-growing economies in Europe in terms of GDP growth with a population of 38.4 million people, 14.2 million households and 20 million Facebook users. Orange is the largest of four mobile and four fixed-line operators in the market and the only operator with both fixed and mobile networks. The Polish communications services market is characterized by low prices, low ARPU and intense competition.
Orange Poland's business has been steadily declining. In the third quarter this year, revenues were down 3.9%, a continued trend from the previous two quarters. Orange Poland CEO Jean-François Fallacher said: "My challenge is to find ways back to growth."
It is only the fixed-line PSTN voice business that is declining -- as one might expect -- but also the fixed-line broadband business, which Fallacher blamed mainly on having legacy DSL technology.
"The decision to invest in fiber in Poland is absolutely crucial to rebounding the business," he said.
Starting last year, Orange Poland is investing roughly 600 million Polish zloty ($154 million) a year in fiber deployments. As of the end of September, Orange Poland had 57,000 FTTH customers and passed 1.2 million households. It plans to reach 1.5 million by the end of this year and 3.5 million by the end of 2018, which would be a quarter of households in the country, noted Fallacher.
Of the newly acquired fiber customers, 47% are convergence customers -- that is, they take at least a fixed-line and mobile service.
And since mobile services account for two-thirds of Orange Poland's business, investment in 4G is important here, too. The operator recently acquired new spectrum licenses in the 800MHz and 2.6GHz bands and its 4G network covers 97% of the population.
"We're using fixed services based on 4G in rural areas where our customers are complaining about the speed of DSL," said Fallacher.
Fallacher also noted that the operator's investment in fiber has benefits for its mobile network. He said that 60% of its basestations in Poland are connected via fiber. "There is a very concrete synergy between fixed fiber investment and mobile," he said. "And we see much less congestion on a basestation that is connected with fiber."
With fiber and 4G technology foundations, Orange can start to build new converged services targeted at households. In Poland, Orange has launched three such offers: an Orange Finanse banking service, Orange Energy and Orange Smart Home. So far, Orange has 345,000 banking customers, 15,000 energy customers and has sold 8,000 smart home kits.
Serious about convergence
Pellissier said that convergence generates value, reduces churn by between 10% and 40%, and, most importantly, brings in new services. Orange has nearly 10 million convergent customers, which is 11% more than it had a year ago, he said.
And to show just how serious it is about convergence and the value it creates, Orange will publish a convergence financial indicator with its quarterly results starting in the first quarter of 2017.
— Michelle Donegan, contributing editor, special to Light Reading